House prices will keep falling for another 3½ years

2009/01/25 23:49

I forgot to blog this at the time, but there was an very interesting article in The Economist a few weeks ago.

It was about a recent statistical study of recessions that had come up with some interesting results.

House prices tend to fall 36% from their peak, and this fall takes five years. These two figures are fairly uniform.
Equity prices fall even more, by 56%, but this is faster: Only 3½ years. These figures are also rather uniform.
Rises in unemployment, on the other hand, varies a lot from one recession to another, but on average it rises by 7% over almost five years.
And finally, the fall in GDP is typically 9½% over two years, but again with large variations.

In Glasgow, house prices started falling in the autumn of 2007, so prices are likely to keep falling until 2012.

The Widmann Blog