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Trading Lessons

No UK House Prices Brexit Crash 2016 Despite London Weakness, Forecast 2017

Housing-Market / UK Housing Jan 02, 2017 - 02:08 AM GMT

By: Nadeem_Walayat

Housing-Market

UK house prices ended 2016 up 7.2% (provisional) despite London house prices weakness that according to the Nationwide increased by an average of just 3.7%, near half the UK rate. This illustrates why so many housing market analyst / journalists got UK house prices so badlty wrong for 2016 as they mistakenly latched onto London weakness as sign for a imminent UK housing market bear market or worse a Brexit CRASH After all the consensus view was that if London was weak then the rest of the UK would be suffering far worse. This view was liberally regurgitated across the mainstream press all year.


Whilst my comprehensive in-depth analysis of over a year ago concluded that whilst I expected London house prices weakness during 2016. However this would NOT impact significantly on average UK house prices as London during 2016 would effectively pass the UK house prices bull market batton to the regions that I expected would outpace London and thus lift the average house prices higher so as to ensure a continuation of a strong UK housing market during 2016.

Instead now, a year behind the curve the mainstream press is coming out with headlines such as - "London house prices rise less than UK average for first time since 2008" as reports the Guradian

Establishment Mainstream Media's BrExit House Prices Crash Propaganda

In the run up to the EU referendum the establishment REMAIN camp had peddled a perpetual year long story that UK house prices would collapse or crash if BrExit happened, as operation fear each month ramped up the threats of that which awaited a post Brexit Britain.

For instance George Osborne repeatedly issued doom warnings that likely contributed to his swift sacking by Theresa May

“If we leave the European Union there will be an immediate economic shock that will hit financial markets... That affects the value of people’s homes and the Treasury analysis shows that there would be a hit to the value of people’s homes by at least 10 per cent and up to 18 per cent." - George Osborne

And so the establishment media and institutions such as the IMF and OECD peddled propaganda of expectations for a UK housing market crash right into referendum voting day if the people of Britain voted for freedom.

Worse still the clueless mainstream media continued with its UK housing market doom mantra even after the BrExit vote, which illustrates that most of that which is published and broadcast is purely propaganda rather than that which is derived from methodologies aimed at arriving at that which is the most probably outcome, which is why they missed BrExit AND Trump as these election outcomes were not in the interests of those who own the establishment media -

Property market on the ropes following Brexit vote
Mirror.co.uk-28 Jun 2016
Annual house price growth will rapidly slow down towards the low single digits across the UK's major towns and cities as the EU referendum ...

A Post-Brexit House Price Crash Is the Real Danger for the U.K.
TheStreet.com-30 Jun 2016
Unlike in the U.S. and in European countries like Spain or Ireland, the U.K. did not see a real house price crash following the financial crisis of ...

The Brexit effect on UK property will be more devastating than ...
Business Insider-10 Jun 2016
While Chancellor George Osborne already warned in May that a Brexit would make house prices crash by 10% to 18%, Mark Burrows and his ...

Zoopla's EU warning claiming house prices could drop by 20%
Daily Mail-18 Jun 2016
The company, which allows owners to monitor the estimated value of their property, said the current average house price of just over £297,000 ...

London house prices are heading for a 20% fall
MoneyWeek-23 Jun 2016
In other words, unless you believe that property prices will keep ... of MoneyWeek, house prices elsewhere in the UK are expensive by historic standards. ... A muted or crashing London market certainly will make most people ...

Brexit impact on house prices is uncertain, Nationwide says
BBC News-27 Jul 2016
Even so, the resulting impact on house prices was "not certain". ... Generally, investors have expected the UK housing market to be hit by any slow ... has not been a crash in property prices since Brexit, more of a soft landing.

Britain's housing market is one interest rate hike away from a crash
Business Insider-19 Jul 2016
Britain's property prices are so high and wages are so low that it only takes one interest rate hike to topple the market. This is because housing ...

Brexit could cut London house prices by more than 30%, says bank
The Guardian-18 Jul 2016
London property prices could fall by more than 30% in the wake of Britain's vote to leave the EU and may halve in the most expensive parts of ...

3 'Devastating' Charts Show How Brexit Is About To Hit House Prices
Yahoo Finance UK-30 Jul 2016
Brexit is going to kill house prices, says the Royal Institute of Chartered ... analysis, stressed that a Brexit would reduce UK house prices.

For more on why the mainstream media does not understand the primary drivers of the UK housing bull market then see my comprehensive UK housing market analysis video in the implications of BrExit series.

UK House Prices 5 Year Forecast 2014 - 2018

In terms of the prospects for UK house prices, it is now 3 full years since excerpted analysis and the concluding 5 year trend forecast from the then forthcoming UK Housing Market ebook was published:

30 Dec 2013 - UK House Prices Forecast 2014 to 2018, The Debt Fuelled Election Boom

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:

The most recent UK average house prices provisional data for December 2016 (£218,671) is showing a 5.6% deviation against the forecast trend trajectory, which if it continues to persist then in terms of the long-term trend forecast for a +55% rise in average UK house prices by the end of 2018 would then translate into a 9.4% reduction in the forecast outcome to approx a +46% rise by the end of 2018.

UK House Prices Momentum Going into 2017

In the run up to BrExit I expected momentum at the time to slow from 8.7% for a few months after BrExit to 5% before rising again towards 10% by the end of 2016.

What actually transpired was momentum falling to +4% in August before rising to end the year at +7.2%. So house prices trend turned out to be weaker than expected which is not surprising given the series of post Brexit political events that have subsequently transpired as Britain now awaits Article 50 to be triggered by the end of March 2017. Nevertheless the trend going into 2017 continues to favour rising UK house prices during 2017.

UK House Prices Forecast 2017

Whilst my core 5 year forecast targets an annual rate of +10%, against this is current momentum of +7.2%. On top of which we have much BrExit / Article 50 uncertainty for 2017 which is manifesting itself in weakening London house prices, including falls for many areas. This leads me to conclude that UK house prices are going to find it very difficult to get back to anywhere near a +10% inflation rate for 2017 and thus the most probable outcome is for UK house prices to end 2017 with a very similar gain to that for 2016 i.e. a about +7%. Which would still be quite a strong increase in house prices especially when one considers that which the usual suspects that fill the mainstream press are forecasting i.e. End of the property? UK house prices to flatline, says forecast - The Guardian

Sample of usual annual forecasters:

  • RICS +3%
  • Halifax +2.5%
  • Nationwide + 2%
  • Countrywide -1%

Stock Market 2017

The FTSE ended 2016's last day of trading at a NEW ALL TIME high of 7,142, which according the mainstream financial press's reporting for virtually the whole year was an IMPOSSIBLE outcome. After all the surprise BrExit EU Referendum vote result was supposed to have heralded a crash, collapse, recession new bear market, NONE of which materialised! As for a taste of what's in the store for the stock market for 2017 then see my recent video analysis posted right the recent peak of the Dow, on the day it touched a new high of 19,987, that warned "These Stocks Bull Market Delights Can Have Violent Bear Market Ends" and why I was seeking to sell 50% of my stocks portfolio.

Ensure you are subscribed to my always free newsletter and youtube channel for forthcoming analysis and detailed trend forecasts aimed at capitalising on Trumps Coming War on China amongst other mega-trend drivers.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2016 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Yuriy
15 Jan 17, 14:58
Uk house pricesd against basket of currencies

Hi Nadeem,

could you also post a graph of UK house prices against dollar or a basket of currencies of most important UK trade partners?

It will show that house prices are still way below 2007 peak.


Nadeem_Walayat
15 Jan 17, 20:35
House prices and hindsight

Yes in hindsight you can pick any other market that has gone up and say look against this it has fallen.

But unless you saw it say 3 years ago and then acted to capatailise on it at the time then whats the point ?

Afterall you can say the same for anything, which is what bears tend to do, the dows gone to 20k so lets see if we can find soemthign thats gone up more and say look against xandiium prices the Dow has not gone up so stocks are in a bear market!

The ONLY price that matters is in ONES DOMESTIC CURRENCY, all else is basically worthless comparisons, well unless your domestic currency is like the Zimbabwe dollar, then I suppose it matters.

99.99% of UK citizens don't buy properties on the basis of what they think sterling will do against x,y,z unless their earnings in totality are in those currenciess.

So yes whilst it matters for foriengers, as they price assets in THEIR OWN DOMESTIC CURRENCY, it makes near zero difference to UK citizens.

For instance, even though I have a footprint elsewhere in the world, I price assets and percieve wealth in my DOMESTIC CURRENCY - sterling, it does not mean anything what the exchange rate is in terms of that, only in terms of when I physically buy something priced in dollars etc, and not the value of property that I bought 5 years ago. Now if I were liquidating my property to move to the US THEN it would matter, but only then.

So No, it does not matter for most holders of UK property what the US, Aussie or Zimbabwe dolllar is going.


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