The last crash resulted in a bounce along the bottom for several years and did not return to it’s 1989 peak until March 1998. More interestingly however, prices adjusted for inflation (CPI) did not return to their peak until February 2002.
It would be unwise to try and predict where prices will go this time. They could bounce along the bottom for a few more years yet, as they did after the last crash. However one thing that we can perhaps be more certain about is that if we adjust for inflation then prices will not return to 2007 levels for a few years longer still.
I love the graphs, especially the adjusted for inflation. However what is interesting is the natural tendency to believe the house prices should move above inflation, sure that may have been true of the last 30 years, but does it hold now? I think it is unlikely with a retiring baby boom, and no wage growth.
ReplyDeleteSo on that premise could we say that we could draw a straight line through the graph around the 175 index point, that would seem like about the right price :)