Is the Property Market Overvalued?

Answer

This is the question everyone tries to answer and the field in which many experts predict and fail.

The odd thing is there are major industry figures who have a terrible track record on this and yet the media continues to ask them the question "Is the property market overvalued?"

A classic example is Roger Bootle who, via his firm Capital Economics, continually forecast the property market was overvalued and that prices would come down since the 1990s.

It didn't stop Bootle nipping off to buy a property himself, not really the actions of someone who seriously believed what they were buying would be cheaper next year ... but there you go.

Ironically when property prices did go down during the Credit Crisis starting in 2008 they didn't predict it, then they over predicted by how much the fall would be, and so on.

But it would be unfair to single out just Bootle. Everyone gets it wrong in both directions on a regular basis.

In my ebook How to Really Buy a Property I'll show you who they are and how often they get it completely wrong!

What I won't be able to tell you is if the property market is overvalued, no one can. Even just before the 2008 crash major players were predicting further rises. No one had a clue what was really going on.

My approach is to view a property purchase over the long term - at least 10 years. You'll have to look long and hard for an area of the country where prices moved down over that period at any time in history.

However if you are specifically buying a property as an investment I devote an entire chapter to explaining exactly how you can do that ... and it really is very simple!

Search Results for 'bubble' in
How to Really Buy a Property

"... predictions for the property market (and who doesn't); How the market works over the short term and the long term; The difference between property bubbles and property booms; Why it can be a good idea to buy when prices are falling; The principles of buying a property to let and what the..."

"... a mystery. As a slight sideline, in 2013 Davis purchased a house despite his own forecast that anyone doing so would lose money and even as he was quoted by Reuters in November 2013 as saying "UK housing has been in a bubble for 10 years. All bubbles eventually burst though". -..."

"... on the World Trade Centre in 2001, the war in Iraq in 2003 and the Credit Crunch of 2008. For more information on this is and how it affects the market see Chapter 6: Property bubbles and Market Crashes..."

"... few property owners who are prepared to offer their real estate to the market. The difference between bubbles, Bursts, Booms, Busts and Crashes; Examples of bubbles bursting compared to market busts; What the UK property market follows; The role of..."
"... to the market. Examples of bubbles bursting compared to market busts; What the UK property market follows; The role of confidence and capitalism in the property markets; Why the UK has..."
"... to market busts; What the UK property market follows; The role of confidence and capitalism in the property markets; Why the UK has never had a property bubble; When the figures cannot be trusted; Understanding the statistics; How demand can fall but prices remain static. In..."
"... In many countries, including the UK, protecting property prices from large falls was part of that plan and a political necessity. - Property bubbles - bubbles are often confused with booms and crucially property booms are often misreported as property bubbles. For a property bubble..."
"... from large falls was part of that plan and a political necessity. - Property bubbles - bubbles are often confused with booms and crucially property booms are often misreported as property bubbles. For a property bubble to occur real estate must be over valued by the market in isolation...."
"... as property bubbles. For a property bubble to occur real estate must be over valued by the market in isolation. If, in 2008, the economy had continued to grow but house prices had started to drop then it could be said that there had been a property bubble. A perfect example of a real..."
"... perfect example of a real bubble was the route that dotcom shares followed in the late nineties and at the start of the millennium. There was an over confidence in what internet companies could achieve and a strange concept that the more money the company lost (known then as its "burn rate"), the better it..."
"... and individuals piled in, driving the share prices of on-line companies sky high, a bubble was occurring. The burn rate theory might have been right, this was new technology and virgin territory. But it wasn't. Investors pulled out, the bubble burst and share prices for many internet related businesses..."
"... out, the bubble burst and share prices for many internet related businesses plummeted. Crucially this happened with little affect on the rest of the economy. On it's own it can sensibly be called a bubble. Understand the difference between a boom and a bubble and you realize that there has..."
"... on the rest of the economy. On it's own it can sensibly be called a bubble. Understand the difference between a boom and a bubble and you realize that there has never actually been a property bubble in the UK. The early nineties saw houses prices fall as the economy moved into recession..."
"... early nineties saw houses prices fall as the economy moved into recession and rose as it came out the other side. The same events followed the 2008 downturn and in both cases changes in value from peak to trough were less than 20% . British property follows the business cycle of Boom and Bust rather than a separate and isolated bubble and..."
"... gradually became clear that Clapham was up and coming, but not that quickly, which caused a bust and two bedroom apartments lost around ten percent of their value. A similar situation in 2004 pushed the price skyward to £270,000 but only for around eight weeks before sinking back to the same value they had been selling for three years previously. In percentage terms these were relatively small changes and so reflect boom and bust rather than bubble and..."
"...This is not to say the property bubble concept isn't valid and it does occur. Ireland was a striking example where prices moved up ever higher from the turn of the millennium. The collapse in values, over 50% from their peak, was far greater than the general recession of the country or any reduction in GDP. The business cycle had moved to the bust phases but real estate was much more than just bust, it was a burst bubble. ..."
"... burst bubble. Some Bulgarian resorts have also seen bubbles burst as foreign investors got carried away with rapidly rising apartment prices. Property moved far beyond the reach of the local population and when the buyers from abroad began to loose interest, the bubble burst. - When the..."
"... and busts are different from bubbles and bursts but they are often mixed up by the media. In Britain there has never been a true property bubble which burst on a national scale but it has happened locally. Instead property prices follow the booms and busts of the business cycle and a way to predict this accurately has yet to be..."

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