Well Ed Stansfield from Capital Economics seems to think so, he said in The Sunday Times this week, that they are still holding to their ridiculous prediction that by the end of 2007, the average house price will be 20% lower than at the end of 2004.

Did you know that they predicted a fall of 6% in 2005? Next year they predict a fall of 9.5% and a further fall of 5.1% in 2007?

What amazes me is where they come up with this absolute rubbish, they really are adding up some wrong information from somewhere, and going down some silly assumptive paths.

Did you know that according to the Office of the Deputy Prime Ministers website (which Capital Economics continually cite in their statistics) since 1970 the housing market has only fallen annually 4 times. In 1990 it fell 1.3%, 1991 it fell 1.4%, 1992 it fell 3.8% & 1993 it fell 2.5%. Even in those appalling times for the property market, with those disastrous interest rates, the property market as a whole fell at its worst by 3.8% in one year.

Where do they get off trying to worry people that the market is going to fall by a minimum of 5.1% per year for the next 3 years? These are not experts in this matter at all and should be held accountable for their awful predictions, please remember, people really do take the junk they push out seriously!

According to Nationwide, house prices fell by 0.2% in September and Nationwide are still predicting a growth in the market overall by 1.8% this year. That would make Capital's figures out by 7.8% this year alone!

According to Halifax, house prices went up by 1.2% in September and Halifax are still predicting a growth in the market overall by 3% this year. That would make Capital's figures out by a massive 9% in just 1 year!

Why is it people still take their predictions about the property market seriously? What Capital Economics are basically saying is that the Halifax and Nationwide have no idea what they are doing.

It is quite obvious to me that they are a respected company and the public has a short memory. So they must be hoping that when they are proved wrong that they are safe in the knowledge that no one will remember their awful predictions, what's more they're right. Everyone will have forgotten and they will be able to peddle their awful wears next year.

Roger Bootle, one of the Chancellor's ex-'wise men', put his name to this prediction. I have no idea what tobacco they are smoking but, I think its time they re-looked at their figures or employed somebody with just a little bit of common sense as well as definitely changing brands.

It is obvious to everybody (except Capital Economics) the economic conditions we face today bear no resemblance to those of the early nineties. Then we have the SIPPS issue next year and as I keep saying, "All of that new money coming into the market isn't going to push prices down!"

For Capital Economics prediction to be right we would need to see an annual fall next year (by my calculations) of 15.4% and 8.2% in 2007. That would mean property overall would have to fall 4 times worse than it fell in1992!

Is there anyone out there who believes that possible? If you do then I suggest you stop reading.

I no longer specialize in predicting the property market value as a whole, as I consider this to be gambling, we choose to invest not gamble. Yes I will take advantage of the fact that I think SIPPS will push prices up, but it in no way is my primary reason for investing.

I do predict that property will double in the next 7 – 10 years, and I do think there will be a market rise of sorts when the SIPPS rules change. We should start to see that rise around August next year. I do think interest rates are still slightly too high and I think 4.25% is the right amount for stable growth going forward. I personally think that if the average property price at the end of 2004 was £172,788 then it will comfortably be £208,719 by the end of 2007 a rise of over 20%.

This would mean I think it'll be worth £208,719 & Capital Economics think it'll be worth £139,494. Now they are economic experts (or so they say) and I am no one, just a small property investor, logic says you should believe them, but ask yourself this: -

Is it logical for the whole country to experience a fall over 4 times worse than the 1990's next year? Or, is it logical that the good economy we are in and all of the new money coming into the housing market next year will increase the prices on property?

All you need to do is use common sense to answer this, why is it that this economist has failed so appallingly to use just a little of it?

Choose Investing not Gambling!