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Why 95% of Traders Fail

Capital Economics UK Housing Market Forecasts

Housing-Market / US Housing Nov 07, 2008 - 11:35 AM GMT

By: Nadeem_Walayat

Housing-Market

Best Financial Markets Analysis ArticleWhat is the value of typically the same housing bear market / crash forecast that is rolled out every few months? This article takes a look back at Capital Economics that has been grabbing the headlines of late of having forecast the UK housing market crash of 2008. However if you dig a little deeper the actual accuracy of Capital Economics housing market forecasts evaporates into thin air.


BBC December 2002 - Capital Economics warned that the UK property market was severely overvalued, and that prices could fall by up to 30% over the next few years.

BBC October 2003 - House prices are set to fall by 20% in the next 18 months, a leading economics firm predicts. - Capital Economics argues that central banks in both the US and UK have fuelled the housing bubble by keeping interest rates deliberately low, and house prices are now at "dangerously high levels." It predicts that average house prices will fall from £135,000 in 2004 to below £110,000 in 2007, before beginning a more gradual recovery.

BBC September 2004 - Capital Economics is not predicting a sudden drop in prices, but a slow 20% grind lower over the next 2-3 years.

BBC May 2005 - Economic forecast group Capital Economics, which has predicted that house prices could fall, reiterated that the market had reached an "impasse", with buyers and sellers unable to agree on prices. "We expect the pace of the slowdown to pick up as the year progresses, in line with more gloomy reports from surveyors and housebuilders," Capital Economics said.

Independant Nov 2006 - Capital Economics Giving up on House Price Crash ? - Ed Stansfield, property economist at Capital Economics, said: "I cannot see 2006/2007 being the time we look back on and say 'yes, that was the start of the housing market crash'."

BBC April 2007 - Capital Economics Turns Bullish ? - Capital Economics, which in 2003 famously predicted that the UK was headed for house price falls of up to 20%, broadly agrees with Mr Boulger's upbeat analysis. "It gets to a stage when you can't keep saying a crash will happen while prices keep on rising," Ed Stansfield, analyst at Capital Economics, admits.

Gaurdian November 2007 - Some three months after I forecast the Housing Market Crash of 2007-2008 Capital Economics were forecasting - So, what are the experts saying about 2008? The bleakest assessment (if you are a homeowner, that is) comes from Capital Economics, which says it expects house prices across the country to fall by 3% during both 2008 and 2009. 3% ? Is that all ? After years of forecasting 20 to 30% drops now Capital Economics is down to a absymally poor forecast of 3% per year for 2008 and 2009, AFTER house prices had already peaked and fallen !

Telegraph- November 2008 - "This housing market correction has already overtaken the 1990s crash and, with the economic slump deepening, it is set to get worse. Interest rate cuts will not be enough to stop the correction, nor slow the pace of house price declines. We expect house prices to fall a further 20pc in 2009," said Seema Shah, property economist at Capital Economics.

What did House Prices actually do from the period December 2002 until the first half of 2007 when Capital Economics apparently started to throw in the towel and give up on the housing market crash that they had been calling since at least 2002!

Its Not Capital Economics fault for being crap at forecasting UK house prices, but rather the mainstream media not having any clue what they are reporting on instead of churning out the same repetitive drivel labeled as financial journalism ? No wonder their readership base is constantly shrinking due to poor journalistic standards.

August 2007 - Market Oracle UK Housing Market Crash of 2007 - 2008 and Steps to Protect Your Wealth

UK Housing Market Conclusion: The UK Housing market is expected to decline by at least 15% during the next 2 years. Despite the 2012 Olympics, London is expected to fall as much as 25%. UK Interest rates are either at or very near a peak, as there is an increasingly diminishing chance of a further rise in October 2007. After which UK interest rates should be cut as the UK housing market declines targeting a rate of 5% during the second half of 2008. The implications for this are that the UK economy is heading for sharply lower growth for 2008.

The UK housing market forecast is due for an imminent update after the 15% target having been fulfilled this month. Subscribe to our always free newsletter to get the scheduled analysis in your inbox on the day of publication.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-08 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 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 is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 150 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.

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