House prices is an economic area I specialise in, but I won't get boring and blind you with science, instead ask yourself why did house prices rise by up to 400% in the UK over the past decade? The answer is not "shortage of supply"
it was entirely due to cheap and readily available sub prime credit, backed by the MBS market, allowing ordinary dull folk to chase their dreams of becoming properdee milionaires..
For you to quote, for example, the Daily Express, as a indicator of the fundamentals supporting house price inflation is absurd. The M.Media merely repeat ad nauseum the pr issued by; NAEA, Rightmove, HBOS etc.
At a stroke (and it will have given a few of them one) buy to let numpties were killed stone dead with the Lib Con 40% tax promise on Thurs/Fri. Given that the mortgage industry is now behaving akin to the rules of the 70's-80's house price inflation is dead for decades as that cheap credit will never come back in our lifetimes in the form it was peddled. Despite the base rate being 0.5% most new mortgage rates are 6% if you have a 10% deposit, that tells you were mortgage rates are headed once base rates increase to 3%.
House price inflation can only survive in an inflationary environment with relatively full employment opportunities and positive economic outlook, neither of which will be replicated for a decade or more as stagflation is baked in and the best we can hope for (in the UK) is 2 lost decades of Jap style stagflation.
According to the ONS 29% of UK adults are economically inactive, that's 8 million. 5.2 million rely on out of work benefits arguably indicating that the real level of unemployment is circa 18%, hardly the backdrop to inspire house purchase as an investment with other people's money which has now disappeared from the market place...want a buy to let mortgage? The rate is 5% and you need 25% deposit and proof that the rental will exceed the interest only mortgage payment, deader than dead...
Facts;
There were 10,000 repos in the first Q of 2010 despite all the support from lenders and govt assistance and the boom in sale and rent back...not good...
There are, according to Rightmove, 1,000,000 plus properties for sale at any given time, yet only 30-40K are being sold per month which is 100% down on the end of the hubris in Q3/4 2007.
The average house price is still 7-8 times single salary and generally *healthy* inflation can only be created with wage inflation as its catalyst, which will not happen given the client state emolyment sector will be benign for at least the term of this government. Prices are still 20% over there long term average vis a vis wages, a 20% further crash is inevitable and even this will not make property affordable so a further 40% cannot be ruled out...
TBH I could go on but I get bored with house prices as a sdject, been there done that, made my cash and moved on. We only have 1 property each and a tiny mortgage. You're suffering from denial, I've seen it for years with property investors/speculators; I saw sight of a portfolio for sale the other day, guy reckoned it was worth 2 mill when in reality it was worth half that, "been good enough to fool the banks for years though eh?" Not any more...
Let go of this obsession of yours, you and the 2 million new landlords that bought into the nonsense over the past decade cannot stare the market up any more than you can a 5 minute candle...
