hereward the wake
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A doubling then tripling in house prices by 2030
Impact on House Prices
The impact of the demographics crisis on the UK Housing market is suggestive of increasing supply from the mid to upper range of the UK housing market as many people approaching retirement will have during their working lives looked on their homes as a means of providing for them in their retirement as they expected the rise on house prices as a consequence of inflation and economic growth to result in a profit far in excess of any outstanding mortgages at the time of retirement and in most cases they will have played the property market wisely even after allowing for the depression of the past 5 years as many will be sitting on small fortunes, especially those that bought in the South of the England 30 or even 20 years ago. Therefore a significant number of retirees look set to continue to either downsize or move into retirement homes or the new retirement villages that have been springing up, which will in part free up supply to put a dampener on rampant house price inflation of what we saw during the last boom whilst INCREASING demand for smaller properties in retirement towns and areas of the country such as sea-side towns.
Furthermore the psychology of seeing ones property as a retirement investment is widespread amongst all ages so continues to act as an encouragement to buy as people who cannot ever imagine that properties will ever yield less at the time of retirement than they do when bought, but instead the mindset is fixated on what has come to pass for their parents and grand parents generations.
In addition to this we have the wage slaves with less real terms disposable income to pay towards housing costs in terms of mortgages which on face value implies a persistent real terms deflationary outcome for UK house prices over the next 20 years. However this has to contend with rampant immigration coupled with domestic population growth as immigrant couples tend to have larger families which coupled with the benefit culture baby making factories will result in at least an extra 10 million people, a trend that is more than capable of overcoming the deflation as a consequence of the ageing population that ultimately has to imply persistently high real rates of inflation not just for house prices but for sectors right across the economy.
Furthermore as more of the benefits for life claimants are increasingly encouraged or forced into work, in addition to many more retirees continuing to work in some capacity will improve Britain's productivity which coupled with ongoing exponential technological advances will mean that a ratio of workers to retirees that is unsustainable today could be sustainable 20 years from now which ultimately translates in workers being able to support a greater proportion of wages being spent on housing costs in terms of affordability than is the case to today, which is why those fixated on affordability ratio's as compared against the past will continuously find themselves wrong footed, as ratios get ramped ever higher from 20% of income 20 years ago to 1/3rd of income today to 50% of income in 10 or so years time.
Therefore the message being painted by this demographics analysis supports my long standing view that one of the only ways for people to leverage themselves to the exponent inflation mega-trend consequences is to be exposed to assets such as housing and not only that but whenever prices fall due to fluctuations in the business cycle even if not in nominal terms but just in real terms (after inflation) than home buyers should seize the opportunity presented because the over riding trend for house prices over the next 20 years will be for only in one direction! A doubling then tripling in house prices by 2030! Where ALL of the risks are to the UPSIDE, i.e. out of control inflation which may in its immediate aftermath result in a real terms drop but which would sow the seeds for the next ramping higher in house prices just as the Great Recession house prices depression had concluded in the embryonic bull market of 2012.
In terms of towards formulating a house prices forecast trend trajectory, then this analysis is supportive of my view for a sustainable average house prices inflation rate of 10% per annum (compound) over the remainder of this decade.
The Mainstream Press Nearly Always Gets it Wrong!
It is ironic that at a time when I was iterating the strong probability for a multi-year UK housing bull market of approx 10% per annum at the start of 2013 that the consensus view was one of prevalent doom and gloom right across academia that even infected vested interests such as estate agents, which goes to show the role sentiment can play where the mainstream media is concerned i.e. overly pessimistic when its time to buy and overly optimistic when its time to get out!
Daily Mail - 1st Jan 2013 - Bad news for homeowners as house prices will not return to pre-recession peak until end of the decade
House prices in Britain will not return to their pre-recession peak until the end of the decade, making this the longest slump in the property market since records began.
A report by a leading estate agent said the price of the average home peaked at £183,959 in 2007 but has fallen so dramatically it will not return to this level until 2019.
The 12-year recovery period could be the longest since records began in the 1950s.
The report said that once the impact of inflation is stripped out, average prices will not return to 2007 levels until 2031 – an incredible 24 years after they peaked.
And at the time the likes of the Telegraph were even more pessimistic.
Instead it is increasingly probable that a year from now (early 2015) that average UK house prices will have passed their 2007 highs some five years ahead of that which the mainstream press were forecasting. So the bottom line is that If you listen to the mainstream press then you will always miss the boat and both be too late to buy and too late to sell as was illustrated by the mantra of the soft landing during 2007 and 2008 whilst the UK house prices were entering a state of free fall as I repeatedly warned at the time.
25 Sep 2007 - UK Housing Market on Brink of Price Crash - Media Lessons from 1989!
The UK Housing market is teetering on the brink of a crash led by the buy to let sector investors jumping ship. But the messages coming from the major banks and UK central bank are still benign. In many ways the situation is reminiscent of the initial stages of the the early 1990's property bust, which was also accompanied by soothing statements that ignored the facts on the ground as this article will illustrate.
Current Opinions Amongst Major Institutions
Bank of England - The U. K. housing market remains in good shape despite turmoil in financial markets, Bank of England Monetary Policy Committee Member Kate Barker - 20th Sept 07
Halifax Bank of Scotland - UK's largest mortgage lender said a crash was unlikely as fundamentals remain strong. Also that the credit crunch is likely to result in cuts in UK interest rates and thus supportive of house prices - Martin Ellis, Chief economist- 18th Sept 07
Royal Institution of Chartered Surveyors (RICS) - Only 10% chance of a 1990's style housing market crash, Simon Rubinsohn - 18th Sept 07. This is a barely a month after Mr Rubinsohn recommending buy to let investments - “people who were thinking of dipping their toe into the equity market may now be tempted to forget about stocks and buy to let instead”. (The Independant).
Paragon, Mortgage Company - "the buy-to-let market was still strong"
This analysis is just a small excerpt of that which concluded in the UK House Prices Forecast for 2014 to 2018. Ensure you are subscribed to my always free newsletter for regular housing market updates as well as FREE download of my New UK Housing Market ebook (available from late January 2014).
30 Dec 2013 - UK House Prices Forecast 2014 to 2018, Inflation, Trend Trajectory and General Election 2015
UK House Prices Forecast 2014 to 2018 - Conclusion
This forecast is based on the non seasonally adjusted Halifax House prices index that I have been tracking for over 25 years. The current house prices index for November 2013 is 174,671, with the starting point for the house prices forecast being my interim forecast as of July 2013 and its existing trend forecast into Mid 2014 of 187,000. Therefore this house prices forecast seeks to extend the existing forecast from Mid 2014 into the end of 2018 i.e. for 5 full years forward.
My concluding UK house prices forecast is for the Halifax NSA house prices index to target a trend to an average price of £270,600 by the end of 2018 which represents a 55% price rise on the most recent Halifax house prices data £174,671, that will make the the great bear market of 2008-2009 appear as a mere blip on the charts as the following forecast trend trajectory chart illustrates:
Nadeem Walayat
If you want the whole article with graphs etc let me know and I'll send it to you
Impact on House Prices
The impact of the demographics crisis on the UK Housing market is suggestive of increasing supply from the mid to upper range of the UK housing market as many people approaching retirement will have during their working lives looked on their homes as a means of providing for them in their retirement as they expected the rise on house prices as a consequence of inflation and economic growth to result in a profit far in excess of any outstanding mortgages at the time of retirement and in most cases they will have played the property market wisely even after allowing for the depression of the past 5 years as many will be sitting on small fortunes, especially those that bought in the South of the England 30 or even 20 years ago. Therefore a significant number of retirees look set to continue to either downsize or move into retirement homes or the new retirement villages that have been springing up, which will in part free up supply to put a dampener on rampant house price inflation of what we saw during the last boom whilst INCREASING demand for smaller properties in retirement towns and areas of the country such as sea-side towns.
Furthermore the psychology of seeing ones property as a retirement investment is widespread amongst all ages so continues to act as an encouragement to buy as people who cannot ever imagine that properties will ever yield less at the time of retirement than they do when bought, but instead the mindset is fixated on what has come to pass for their parents and grand parents generations.
In addition to this we have the wage slaves with less real terms disposable income to pay towards housing costs in terms of mortgages which on face value implies a persistent real terms deflationary outcome for UK house prices over the next 20 years. However this has to contend with rampant immigration coupled with domestic population growth as immigrant couples tend to have larger families which coupled with the benefit culture baby making factories will result in at least an extra 10 million people, a trend that is more than capable of overcoming the deflation as a consequence of the ageing population that ultimately has to imply persistently high real rates of inflation not just for house prices but for sectors right across the economy.
Furthermore as more of the benefits for life claimants are increasingly encouraged or forced into work, in addition to many more retirees continuing to work in some capacity will improve Britain's productivity which coupled with ongoing exponential technological advances will mean that a ratio of workers to retirees that is unsustainable today could be sustainable 20 years from now which ultimately translates in workers being able to support a greater proportion of wages being spent on housing costs in terms of affordability than is the case to today, which is why those fixated on affordability ratio's as compared against the past will continuously find themselves wrong footed, as ratios get ramped ever higher from 20% of income 20 years ago to 1/3rd of income today to 50% of income in 10 or so years time.
Therefore the message being painted by this demographics analysis supports my long standing view that one of the only ways for people to leverage themselves to the exponent inflation mega-trend consequences is to be exposed to assets such as housing and not only that but whenever prices fall due to fluctuations in the business cycle even if not in nominal terms but just in real terms (after inflation) than home buyers should seize the opportunity presented because the over riding trend for house prices over the next 20 years will be for only in one direction! A doubling then tripling in house prices by 2030! Where ALL of the risks are to the UPSIDE, i.e. out of control inflation which may in its immediate aftermath result in a real terms drop but which would sow the seeds for the next ramping higher in house prices just as the Great Recession house prices depression had concluded in the embryonic bull market of 2012.
In terms of towards formulating a house prices forecast trend trajectory, then this analysis is supportive of my view for a sustainable average house prices inflation rate of 10% per annum (compound) over the remainder of this decade.
The Mainstream Press Nearly Always Gets it Wrong!
It is ironic that at a time when I was iterating the strong probability for a multi-year UK housing bull market of approx 10% per annum at the start of 2013 that the consensus view was one of prevalent doom and gloom right across academia that even infected vested interests such as estate agents, which goes to show the role sentiment can play where the mainstream media is concerned i.e. overly pessimistic when its time to buy and overly optimistic when its time to get out!
Daily Mail - 1st Jan 2013 - Bad news for homeowners as house prices will not return to pre-recession peak until end of the decade
House prices in Britain will not return to their pre-recession peak until the end of the decade, making this the longest slump in the property market since records began.
A report by a leading estate agent said the price of the average home peaked at £183,959 in 2007 but has fallen so dramatically it will not return to this level until 2019.
The 12-year recovery period could be the longest since records began in the 1950s.
The report said that once the impact of inflation is stripped out, average prices will not return to 2007 levels until 2031 – an incredible 24 years after they peaked.
And at the time the likes of the Telegraph were even more pessimistic.
Instead it is increasingly probable that a year from now (early 2015) that average UK house prices will have passed their 2007 highs some five years ahead of that which the mainstream press were forecasting. So the bottom line is that If you listen to the mainstream press then you will always miss the boat and both be too late to buy and too late to sell as was illustrated by the mantra of the soft landing during 2007 and 2008 whilst the UK house prices were entering a state of free fall as I repeatedly warned at the time.
25 Sep 2007 - UK Housing Market on Brink of Price Crash - Media Lessons from 1989!
The UK Housing market is teetering on the brink of a crash led by the buy to let sector investors jumping ship. But the messages coming from the major banks and UK central bank are still benign. In many ways the situation is reminiscent of the initial stages of the the early 1990's property bust, which was also accompanied by soothing statements that ignored the facts on the ground as this article will illustrate.
Current Opinions Amongst Major Institutions
Bank of England - The U. K. housing market remains in good shape despite turmoil in financial markets, Bank of England Monetary Policy Committee Member Kate Barker - 20th Sept 07
Halifax Bank of Scotland - UK's largest mortgage lender said a crash was unlikely as fundamentals remain strong. Also that the credit crunch is likely to result in cuts in UK interest rates and thus supportive of house prices - Martin Ellis, Chief economist- 18th Sept 07
Royal Institution of Chartered Surveyors (RICS) - Only 10% chance of a 1990's style housing market crash, Simon Rubinsohn - 18th Sept 07. This is a barely a month after Mr Rubinsohn recommending buy to let investments - “people who were thinking of dipping their toe into the equity market may now be tempted to forget about stocks and buy to let instead”. (The Independant).
Paragon, Mortgage Company - "the buy-to-let market was still strong"
This analysis is just a small excerpt of that which concluded in the UK House Prices Forecast for 2014 to 2018. Ensure you are subscribed to my always free newsletter for regular housing market updates as well as FREE download of my New UK Housing Market ebook (available from late January 2014).
30 Dec 2013 - UK House Prices Forecast 2014 to 2018, Inflation, Trend Trajectory and General Election 2015
UK House Prices Forecast 2014 to 2018 - Conclusion
This forecast is based on the non seasonally adjusted Halifax House prices index that I have been tracking for over 25 years. The current house prices index for November 2013 is 174,671, with the starting point for the house prices forecast being my interim forecast as of July 2013 and its existing trend forecast into Mid 2014 of 187,000. Therefore this house prices forecast seeks to extend the existing forecast from Mid 2014 into the end of 2018 i.e. for 5 full years forward.
My concluding UK house prices forecast is for the Halifax NSA house prices index to target a trend to an average price of £270,600 by the end of 2018 which represents a 55% price rise on the most recent Halifax house prices data £174,671, that will make the the great bear market of 2008-2009 appear as a mere blip on the charts as the following forecast trend trajectory chart illustrates:
Nadeem Walayat
If you want the whole article with graphs etc let me know and I'll send it to you
Last edited:
P
postman
Won't rampant inflation mean higher interest rates and crippling mortgage repayments à la 15% in the 1980's, followed by the subsequent crash.
hereward the wake
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he goes on to say....
The consequences of Britain's demographics are as I pointed out 4 years ago in the Inflation Mega-trend ebook of Jan 2010 (FREE DOWNLOAD), that governments only ever have one solution which is to PRINT MONEY be it called debt that will never be repaid or QE or a multitude of other examples such as Funding for Lending, and the consequences of the perpetual exponential money printing is as I have written about on a near monthly basis for at least 7 years is continuous exponential inflation. This is why whenever I hear warnings of deflation, I consider the proponents as being delusional because there has not been nor ever will be DEFLATION!
Dentalfloss
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while we wait for nfp...time to relax and have an american beer to think about those numbers
they need to be above 200k
they need to be above 200k
P
postman
Its got to go BANG sometime.
The usual rule is when a countries debt repayments are greater than 80% of GDP thats a road from no return. Unless you print more money ??? Madness.
If you take a step back and think that money is not a real thing just an (empty) promise, and the world does actually have enough resources to sustain all of us, then the manipulation of the 'value' of money is just a grand parlour game.
Jessi_trader
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SuddenDeath
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morning htw and and dentist and jessi.
people making house price predictions end up wrong due to government intervention
people making house price predictions end up wrong due to government intervention
hereward the wake
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Its got to go BANG sometime.
The usual rule is when a countries debt repayments are greater than 80% of GDP thats a road from no return. Unless you print more money ??? Madness.
If you take a step back and think that money is not a real thing just an (empty) promise, and the world does actually have enough resources to sustain all of us, then the manipulation of the 'value' of money is just a grand parlour game.
Britain's Debt Fuelled Economic Recovery
George Osbourne recently stated that he now expects the UK budget deficit to magically turn into a surplus by 2018 (current £75 billion deficit). However as is usually the case we need a mountain sized pinch of salt to take with the utterances from politicians and their economic propaganda mouth pieces such as the OBR and the Bank of England that are paid by the state to publish what amounts to nothing more than economic propaganda such as that of the Bank of England's perpetual mantra that UK Inflation will converge to 2% in 2 years time which it misses over 90% of the time!
Leaving aside the political trick of politicians trying to hood wink the voters by statements such as implying that paying somehow reducing the deficit is somehow the same as reducing the debt whilst the truth is that the debt is NEVER REPAID, instead here is a reminder of what the George Osbourne's OBR budget deficit forecast made right at the beginning of the Coalition governments term in office (June 2010) that stated that the UK deficit would be cut to £20 billion by the time of the next election which as I stated at the time was not going to happen as my analysis at that time concluded that the coalition rather than reducing the deficit would go on an extended borrowing spree as they attempted to ignite a debt fueled economic recovery into the Mid 2015 general election.
P
postman
Given that its 5am on the east coast and 2am on the west coast of the good old US of A those algos are working well keeping the dow going up in a straight line.
S&P still edging closer and closer to the 1848 level, it has to be done overnight when everyone is asleep because when the real people start trading at the open they sell it off...
S&P still edging closer and closer to the 1848 level, it has to be done overnight when everyone is asleep because when the real people start trading at the open they sell it off...
P
postman
My new years resolution is to stop reading too much zerohedge! Its amazing what conspiracy theories they come up with on there. They were calling gold up all last year and I think they're still doing it now.
SuddenDeath
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the sp500marc is indicating good strength, 1840.7 very strong, about 1847 ish cash
SuddenDeath
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hereward the wake
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P
postman
SuddenDeath
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FTSE strong like a lion +55
I am guessing who wants to be short into a huge bullish jobs report, US jobs entering strong growth according to some pundits
I am guessing who wants to be short into a huge bullish jobs report, US jobs entering strong growth according to some pundits
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postman
SuddenDeath
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we also have strong dollar today, gbpusd 1.6413 -.0068
SuddenDeath
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sorry to anyone who was short
SuddenDeath
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RDSA maybe breaking out of multi year downtren channel, BP made 52wk high few days ago.
