Isnt it also saying we are only 48% down on 2007, whereas on the ground we seem to be about 65-70% off 2007.
So how does that effect the 2% I wonder.
Fair value is only that, fair value
as we have seen we can go way above it (2000-2007) and way below it (for many years to come)
See every other country on the chart
It certainly doesnt mean we have reached the bottom as many VIs and National Media will state in the next few days
Interesting to read their comments on America - which they now see as being 19% below fair value.
On this basis we still have a long way to fall - time will tell I suppose.
It just shows you how far overpriced property was. Some countries are way undervalued and yet we only -2% with massive yearly falls
Brace yourselves for the inevitable ‘fair value’ = ‘time to buy’ comparisons that are going to start appearing in the media.
Going by The Economist’s figures, if the market has dropped c50% and we only now find ourselves at ‘fair value’, then at the peak of our bubble we were twice ‘fair value’ and 100% overpriced.
(If, as some statistics state, the market has fallen c66%, then that would suggest bubble prices overshot by 200% !)
So if the market failed to stop climbing once it reached ‘fair value’ on the way up, what makes people think it will stop falling once it reaches ‘fair value’ on the way down ?
Some didn’t even think ‘fair value’ is necessary to establish a floor on prices …
Lets see if they mention this paragraph
Eh, the long run average including the years of bubble values?
Mike Catt could do better sums… I mean, my cat, sorry…
Exactly. Relative to long run average, the Nikkei is 50% below ‘fair value’ and the price of Tulips are 99.99% below
" The Economist " ?
The propagation of ramblings and nonsense from a disgraced profession.
Why should anyone take notice of what drivel they spew out ??
u dont support the neo con agenda? Whats the matter with u??
Revealing the entire premise of the argument.
More pearls of wisdom from the Economist.
IFRS 13 - Fair Value Measurement (Appendix A)
So houses are selling at current market prices. Next!
Long run averages of ratios (price to income and rent) are perfectly acceptable. I don’t see an issue here?
That they are accepatable is part of the problem. Not realising that salaries (and rents) were out of line with what could be sustained in the medium term (and that the trend was even more so) in the early-mid part of the decade resulted in faulty sums for BTL and for income multiple stress tests.
If you don’t exclude faulty high values (and faulty low values), you are working with the wrong numbers. They tend not to cancel each other out, either, as faulty low values tend to have a shorter duration than faulty high values (as we’ve seen in the movement of property prices from the late seventies to now.
Are the Economist forgetting we have no banks and no lenders and no liquidity…in effect.
The economist isn’t calling the bottom.
It’s simply stating that, using the price-to-income and price-to-rents ratios, the current market price reflects the long term average.
I think the economist would be the first to recognise that, with ‘no banks and no lenders and no liquidity’, prices have considerably more to fall.
This seems to have got a bit of a response from the perma-bears.
The Economist started doing these pieces back in 2004/2005 when they drew gales of abuse from VIs for suggesting that Irish property was overvalued.
It seems the wheel is turning.
Which perma-bears would those be?
A point being missed here is that ‘fair value’ doesn’t imply that the prices will reflect this. For many years prices were above fair value - now they are about right in key city areas in my opinion (and I’ve walked the walk, as I’ve just bought)