Hi

Very interesting findings in the FT’s latest housing prospects survey. Despite all the current difficulties in many developed European property markets - Spain, UK, Ireland, etc, confidence, long term, remains - it seems - undeterred.

Certainly, for those who subscribe to the view that confidence is the major element in driving property prices, the survey provides some upbeat reading.

The main finding of the FT/Harris poll is this: Europeans have high hopes that the value of their houses will rise over the next five years, even if the next 12 months see prices remaining stagnant or falling.

Among Europe’s biggest countries, the Italians, Spanish and British are most upbeat about longer-term price trends.

But the British are also gloomiest about the short term, with 42 per cent expecting the price of their house to fall over the next year.

And, as the article points out: “Trends in European house prices could help determine the region’s economic performance in coming years by affecting consumer confidence and spending.

A majority of Europeans expect prices to remain flat over the next 12 months.

Hi Robin

42 per cent EXPECTING the price of their house to fall, means that another 40 per cent or so are in for a shock if they put their house up for sale. My colleagues in the estate agency industry repeatedly tell me owners are swimming precariously and rather blindly along that big Egyptian river - and the FT survey seems to back-up the denial theory.

Cheers

Tony B

Hi Robin,

I certainly hope FT are right and that the prices will stay stable over the next few years.

The fact is that the prices are freefalling in many areas of Spain and Madrid already.

I have just been out looking at a few flats in the suburbs of Madrid this evening with some estate agent friends.

Flats that were actually valued by banks and sold at 180,000€ in the summer of 2005 are now on sale for 120,000€. Its a buyers market again.

They tell me that even that price is overvalued and many are waiting for 2009 until the price drops even more. The latest ECB interest rate hikes are the final nail in the coffin. Lots of South American immigrants made unemployed are leaving Spain, heading back to south america and handing keys into the bank and doing a runner!

It is an ideal time for a first time buyer in Spain at present but not nice for people who bought late on in the game when the party was coming to an end!

Crafty property investors can make a killing in this market now if they have the money to invest. For example, rental yields would be good in this area if one were to buy now.

Another estate agent told me he signed the deeds on a flat last week with 100 square metres, 7 year old property and for 200,000€. Thats very cheap indeed. It would have cost over 300,000€ three years ago.

Regards,

Liam

It seems we have not yet hit the Panic phase of the cycle ..... where reality dawns and property prices spiral downwards at an alarming rate ..... or have we, this last months retail figures will deepen the gloom ...... Panic is not far away in the UK!

Hi

Who says the media only reports bad news?!


"The property market will bounce back from its current slump by 2010, research suggests.

National Housing Federation (NHF) study predicts that house prices in England will rise by 25 per cent over the next five years.

It predicts the average home in England will cost £274,700 by 2013, with prices rising by 5.2 per cent during 2011 and by more than 9 per cent a year in both 2012 and 2013.

In the short-term, it expects prices to fall by a further 2.1 per cent in 2009, before beginning to increase in 2010, edging ahead by 1.3 per cent."


Not a great five year average, of course, but nor would it be the end of the world as we know it!

The research,carried out by Oxford Economics, seems to be based on little more than the same demands on the market listed by Kate Barker - sound arguments, but not new. It doesn't appear to address the problem of credit availability, which is really the only reason for the slump now.

And the fact that UK property was grossly overvalued interms of earnings and affordability.

The problem of credit availability stems indirectly from the earnings and affordability issue.

I think youre right Richard. the official figures are ridiculous. I have a portfolio of 40 properties in london. to sell a property at present you need to take 15 to 20% off the Feb 2008 price (thats when I put all mine on the market).

Since then i have sold 16 properties at just slightly (on average) about December 2006 prices. Anything being agreed now would be more like Sept 2006 to June 2006.

I'm expecting things to get to about June 2004.

The banks created the boom and now they are creating the bust.

If they throw money at the housing market again then it will boom again - and then bust again!

I don't think the current management teams and shareholders will do that again.

the new management teams (who are currently at college) may do it again in about 10 years time but not untill then.

However they probably won't even then. We are in a new world. The new economies will go up and the old down to meet somewhere in the middle. Banks won't priortize the Uk as they did over the last 15 years.

We will have to get used to having to pay our way as a country.

what we need now is a sharp correction - either via high inflation or asset deflation so that everything can reach a balance where market forces can work normally again. currently it's death by a thousand cuts.

This is the same in USA. The fed thinks they can intervene in the market by propping up Fannie and Freddie. Forget it. As Margaret Thatcher said - u can't buck the market. The Fed doesn't have the resources to scratch the surface of the US housing market - not without printing hundreds of billions or perhaps a trillion US$.

That would devalue the dollar even more and create rampant inflation. This is the post boom hang over.

It will be nasty but we need to accept the reality of where the sands in the world are shifting.