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UK House Prices Momentum Crash Threatens Mini Bear Market 2017

Housing-Market / UK Housing Jul 21, 2017 - 06:32 AM GMT

By: Nadeem_Walayat

Housing-Market

The June 8th general election result delivering 'chaos and uncertainty' instead of 'strong and stable' not only shocked Britain's political and media establishment but also looks like the UK economy suffered a heart attack with confidence fast evaporating as the economy slows down which makes a mockery of the Bank of England MPC clowns persisting in their talk of raising UK interest rates this year. And along with evaporating economic confidence is the confidence in the UK housing market that risks bringing a 5 year housing bull market to an abrupt end! And this is even before we see the chaos that will ensue once Theresa May quits as PM that risks triggering another chaos inducing general election!


My 5 year UK house prices forecast has now passed its 3 1/2 year mark that originally forecast a 55% rise from November 2013 to the end of 2018.

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 data for June 2017 (£218,390) is showing a 10% deviation against my 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 14% reduction in the forecast outcome to approx a +41% rise by the end of 2018.

UK Housing Market Momentum

Taking a closer look at the state of the UK housing market shows a fast slowdown in momentum, which even at the time the election was called was flashing a red warning sign that Theresa May's dreams of winning a massive landslide majority was unlikely to materialise as my house prices based election forecast based on April data implied to forget about 400+ seats for the Tories as they would be lucky to get even 342.

UK House Prices Forecast General Election 2017 Seats Result, for 2015 was 328

This house prices based forecast worsened by election day as data for May released on June 7th implied a Tory outcome of just 334 seats! And now following the release of data for June, housing market momentum has slowed further from +2.6% to virtually ZERO house price inflation. Which is severe enough to have suggested that the Tories would fail to even retain their existing seats total let alone to win a landslide election victory that the pollsters and pundits were convinced of. So house prices definitely did once more prove to be the most reliable forecaster for the outcome of the UK general election, just as they had been for the May 2015 election.

UK house price momentum has been steadily falling since Mid 2016 after having chugging along nicely at 10% per annum for a good 3 years, now falling to the current low of just +0.7% after a brief rally into December 2016 towards 7%. This is a clear red warning flag that Britain's 4 1/2 year housing bull market is in serious trouble and may even be ending!

Thus the 10% deviation against my 5 year forecast and the collapse in momentum to virtually zero has prompt me to now undertake an in-depth analysis of the UK housing market to conclude in a new multi-year trend forecast, that hopefully will be as accurate as my in-depth analysis and forecast of December 2013 proved to be for at least 3 full subsequent years.

Therefore ensure you are subscribed to my always free newsletter and youtube channel for my forthcoming of 4 pieces of in-depth analysis that seek to conclude in a new multi-year trend forecast for the UK house prices:

1. CITIES ECONOMIC AUSTERITY

Britains' largest cities such as Sheffield are feeling the real effects of crumbling infrastructure as a consequences of 9 years of economic austerity prompting house prices value destroying local council actions.

2. THE LONDON BUBBLE - The centre of Britain's housing market, from which all UK property trends ripple out in waves of either euphoria or despair. A reminder that I have been bearish on the prospects for the London housing market for some time as my video analysis of December 2015 illustrates.

3. UK HOUSE PRICES TREND FORECAST - Aiming to conclude in a new multi-year trend forecast.

4. US HOUSE PRICES TREND FORECAST - And lastly my 3 year US house prices forecast successfully concluded early 2016. The forecast trend of which was in the face of overwhelming doom and gloom for the duration of the then unfolding US housing bull market that I will now attempt to map out a new forecast trend for another 3 years.

As for my current thoughts on the prospects for UK house prices for 2017. We'll I would not be surprised if UK house prices ended the year down by between -1% to -2%, a mini bear market that could be a harbinger of far worse to come during 2018. So again do ensure you are subscribed to my always free newsletter and youtube channel for my 4 forthcoming pieces of in-depth analysis and trend forecasts.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2017 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

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

biju.joseph
26 Jul 17, 20:19
US housing market

Do you mind updating chart for US housing market ?

It has been in an upswing since bottom at March 2012.


Nadeem_Walayat
28 Jul 17, 18:40
US housing

Yeh, I need to do that, it's been so long since I looked at US housing my mind is literally a blank. Which is a good thing where analysis is concerned ! So whatever forecast that follows this process 'should' be accurate.


upwarddog
11 Oct 17, 05:44
US Housing

Hi Nadeem, been looking forward to your US Housing analysis all year and now we are in October :)

With the US stock market levitating at all-time highs it would be interesting to hear your forecasts in housing, especially after such accurate commentary over the past several years. Cheers!


Nadeem_Walayat
11 Oct 17, 19:36
US housing

Yeh, I need to get focused....


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