Where next for property and shares?
We've had a lot of 2006 predictions passing over the This is Money newsdesk in the last few days - house prices up, house prices down, blah de blah.
Many of them seem to be plucked out of thin air. Nevertheless, we think you should be in the know on these things so our property man Simon Lambert will give a round-up of these predictions over the Christmas period - pointing out the reliable house price surveys from the duds. Keep checking out Mortgages & Homes.
The stock market predictions are just as interesting. Most amusingly, is the fact that nearly every year in recent years, the average of the predictions from the City's finest is nearly always for a 7% rise (it was higher post-dotcom boom days). Funnily enough, 7% is also the guideline long-term return for the stock market set out by the City regulator. It seems this forecasting lark is easier than it looks.
Keep an eye out for Mike Clarke's 2006 stock market round-up on Investing & Markets.
And for reference, check out some of our stock market prediction archive here...
Andrew, time to give Dr Williams a call to congratulate him on this forecast. But then he wasn't the only one to see it coming. I expect most average punters on the street knew it was coming. Its just a shame the banking industry and the government chose not to take this issue seriously enough and instead continued to profit whilst they could from both interest and stamp duty.
Posted by: David Jackson | December 17, 2008 at 12:05 AM
Dr Williams,
I think you may be on to something here, affordability is looking very stretched. But then prices have continued to tick along in the past few months - something is still fuelling the rises.
Don't miss the latest discussion at www.thisismoney.co.uk/housepricechat
Andrew
Posted by: Andrew Oxlade, This is Money Editor | July 04, 2006 at 11:05 AM
Dear Andrew Oxlade,
The reality is that according to your experts (who recommend paying less than 35-40% of net income) to buy an average house in the UK, I would need to have a gross income of 3200 pounds per month (2400 net) to safely afford a standard repayment mortage on 140,000, that would be 827 pcm at a very modest 5% interest rate. I would need to be a first time buyer on very comfortable salary of 38,400 gpa.
It is not surprising then that we are seeing the lowest number of first time buyers for 25 years. Purchase chains only complete when somebody gets on the market and somebody gets off (unless its cyclical). When nobody can get on, or nobody wants to, chains cannot complete and there will be a drop in prices. As all markets over-react I expect this to transpire as a 30% sustained fall over the next 3 years.
Sure they will be lots of false dawns along the way, but this future is already written. Meanwhile the UK government will be flooding the market with shoe-box size houses to ensure that this actually comes a reality. This current period of stability and tranquility is just the eye of the storm, the top of the broad peak - the worst is yet to come.
Dr. Stuart Williams
Posted by: Dr. Stuart Williams | February 01, 2006 at 05:36 PM