Tonyb69

When Did You Predict A Crash/slowdown

57 posts in this topic

Is it because we are individual and can think outside the box (David Brent  ), we don't have a herd mentality, or that we work in enviroments where our financial knowledge has taught us how to spot an overpriced asset?

Does it also mean that we will be the first to spot the bottom of the market and buy just before the masses rush in again at the start of the next bubble, or will our bearish instincts cause us to miss the boat?

Face it , IF we on this site had any financial insight when it came to spotting market peaks/troughs , then we would have bought a dozen houses in 94/5 and sold them last year and set off for the seychelles - no excuses about gearing or " I wasnt in a position to do this " - it was a no-brainer (personal disclaimer : I have no brains)

Because of this I dont believe that we have any special financial insight on this site (or certainly no more than other money - oriented sites anyway). However ,I think there may be a hint of truth in the 'non herd ' mentality theory which kind of interested me and manifests itself in some of the more original posts on here (ie nothing to do with houseprices ;) )

I think the site is more a meeting of a mix of people - FTBs , STRs, people looking to move on up that ladder and as such provides a bit of support for when we start to doubt if a crash will happen. You see this whenever the slightest bit of news of prices down/prices up and everyone is either "bring it on and murder the landlords" or "oooh noooo , they'll NEVER go down" . Then some of the cooler heads come on and everybody is reassured again ... Chuck in a mix of humour and distinct lack of chavs and all is pretty cosy.

As for spotting an over-priced asset , FTBs are starting to do this themselves anyway , hence the market is slowing/turning/falling .

When did I think HPs were silly ? About 2003 when I saw one of the flats in my block go for 120k - realised that at that rate I'd never be able to trade up

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or that we work in enviroments where our financial knowledge has taught us how to spot an overpriced asset?

IMHO 98% of (so-called) financial advisers either believe the market will settle at roughly this level for a few years or will rise :o .

I have been constantly in battle with even colleagues in THIS FIRM though I just keep stum now.

When I go to seminars it still amazes me that FAs haven't sussed out what is going to happen - even apparently good guys i.e. professional and, otherwise, intelligent! And these people give investment advice - God help their clients. I can only assume they are either big BTLers and/or salespeople in the guise of (well-camouflaged) advisers.

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When did I predict a crash/slowdown:

Towards the end of 2003, when a house I'd had for sale since May hadn't shifted and buyers seemed to have been becoming picky in the same way that they started to for certain market sectors in 1987 and 1988. The older and more individual properties were staying on the market longer and offers were being taken, despite newbuilds booming.

Also that particular area, Reading, employment prospects were not quite what they were <_< , particularly with Wildcom (Worldcom)'s misfortunes and also outsourcing gathering pace e.g. the Pru. Previously in 2001 or so, some estate agents were citing Worldcom's success and move to Reading a speficic reason for fuelling the boom in its last stages.

My prediction of a correction, at the very least, firmed up in Feb 2004 when on another property my tenant unexpectedly gave notice and I couldn't find another without doing a large amount of renovation and no guarantees of success anyway. I had the property valued for sale as it was and found it had zoomed to about £70K more than I had thought. I did the sums (investment of the capital vs. rental); it was a no-brainer: I cashed in, drew my own conclusions and joined HPC. By the time the 2 properties sold (May & July 2004) I was more or less convinced.

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Last summer, in the Alps, when the Swedish owner of a bar asked me what I thought of the outlook for the London property market. Then it all clicked. I don't know what I was thinking before that moment of clarity.

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I first thought about it around Q3/2003, but at that time (seems like an age ago now), IRs were at 3.5%, and mortgages were ludicrously cheap. The more I researched the market the more bearish I became, it seemed that very few of the bullish arguments held up under closer scrutiny. And then IRs started rising, and I knew, just knew, that this was the beginning of the end. People who had overstretched themselves when rates were 3.5% were now doing their ostrich impressions when rates were 4% and 4.25%. I made the decision to sell in Feb 2004, but couldn't say with any confidence when I thought the top would be. Initially I thought it would probably start in late 2004, but maybe not until late 2005.

But with each month after Easter last year, the tell tale signs of a weakening market became ever more evident to those looking for them and I thought with increasing confidence that the the turnaround was just "around the corner".

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during the summer of 2005 my local newspaper prints and releases a property guide.

this property guide lists all the suburbs in sydney, the median house prices of the selected suburbs and the predicted capital growth for the next five years .

the figures posted by this guide of a minimum of 7 percent to over 12 percent CONSISTENT gains over the next five years.

a little number crunching would lead me to conclude these numbers to be bs and by extension question the sustainability of the current house prices.

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As some of you will know I divorced about 5 years ago and surrendered my old house to my ex.

Financially I was not in a position to buy until about 2 years ago.

Now, to be honest, I could have bought but as everyone in my office keeps telling me, at the time all I kept going on about was that houses were over priced and due for a correction. Now of course it seems the correction has arrived and all they say now is, "you've been going on about it for so long it was bound to happen some time".

Yes, I could have bought 2 years ago, but I still feel that a small correction at the end of 2002 would have prevented us from being on the edge of something potentially very nasty today (homeowners and renters alike will suffer).

Before anyone says anthing about being bitter or missing the boat, I have no regrets. It will be a shame to have to wait a couple more years to buy but I've no intention of dying in the near future so whats the rush.

totally totally agree with you... still dont think I will be ready to buy till end 2007!

I have said that before!

more comfortable about my position now thou!...

Good luck to you!

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when i join i said it would take a while i said things would turn 2q2007 also said by end of 2007 6% rates, this was last year so far ive been spot on with my predictions, i also sais 6.5-7 % next year. Also predicted late summer Autumn prices in london will start to dive.

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when i join i said it would take a while i said things would turn 2q2007 also said by end of 2007 6% rates, this was last year so far ive been spot on with my predictions, i also sais 6.5-7 % next year. Also predicted late summer Autumn prices in london will start to dive.

i predicted q3 04 and STRed in q1 05 - bad move - but things are starting to perk up now

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just reading the comments made from the beginning of this thread........glad i was not a member back then....

...all that doom and gloom would have made me doubt myself and my purchases at the time....

..i bought 2 houses in 2003, one purchase was the week after sept 11th...from a new york stockbroker who thought the whole world economy was going down...i felt different...and i got the house for 40k under the asking and refinanced 6 months later for 20k more than the original asking price....... and since 2003 they have just about doubled in value.......

goes to show.....make your own judgements......

or as my dad says......if you want to be sucessful, hang around sucessful people and vise versa..

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i called the top in 2000, but i was only 16 at the time so i can be forgiven :P , i then forgot about the property market til jan 2007 when i thought WTF people cant seriously be paying this much for houses

even back then as a child i thought the arguments people used to buy property where retarded.

its gone up this much for the last few years so its a good buy becuase it will go up the same amount in the next few years!

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I know nobody will believe me, but I predicted the date of the run on Northern Rock exactly to the day.

'Northern Rock - September 14th' was on a Post-it on my desk for 4 weeks before it happened.

Admittedly there was a bit of luck in getting the exact date right, but still, it impressed everone at work.

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I thought things were getting out of hand in 2001, but didn't think any more about it or a while as I wasn't in a position to buy. I started thinking again in about 2004/5 as I was in a position to buy and decided that things were getting loopy - that was when I found this site. Was very good to find somewhere where my opinions weren't deemed perverse. Also learnt a lot from some of the other posters on this site - led me to some bearish investments that have significantly improved my deposit/security money.

I predicted the run on Northern Rock. Went down town at the beginning of September 2007 with a work colleague and explained to him why I was taking a sizeable sum of cash out of my account - i.e. I expected a bank run some time in the next couple of months (I thought October), and gave NR, B&B, and A&L as possibilities, and that if it wasn't contained all hell could break lose. I think he thought I was barking, until a couple of weeks later...

Interestingly, I can remember talking to a friend who is a bit of an "outsider" in about 2003, and his prediction was 2007/8. I hoped for something a little sooner - expected 2005. That seemed so far in the future back then...

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In spring of 2005, lenders were falling over themselves to give me a mortgage. Got an "agreement in principle" at 3.9% fixed (revisiting after the crisis started, I found that was indeed from Northern Rock).

At the time I was self-employed, and had a contract that was worth good money that year. But I had no history: in 2003 I'd have been (much) better off on the dole, and in 2004 I remained below the level for standard-rate income tax. By any kind of historical standard, that's a risky prospect ("subprime").

The fact they were so keen to lend me large amounts of money in those circumstances told me more clearly than anything we were in a bubble. I still contemplated buying, just to get somewhere nicer than I could rent for the price, but the knowledge that it wouldn't last, together with natural indecision, left me still renting to this day.

Someone who got the timing spot-on: that Prime Minister who quit while the going appeared good, leaving his no-longer-prudent friend to take the fallout!

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In spring of 2005...

Was late summer 2004 when it really clicked that things werent right.

I realised that the entire economy was based on debt and the expansion of debt. Of course this was unsustainble and had to end.

What I didnt realise was quite how bad it would be when it did end.

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1976, having just read Meadows & Meadows "The Limits to Growth", and having had the opportunity to muck about with their 'World Model' on the University of London computer system via JANET - an early subsystem of the internet. Didnt expect to see it in my lifetime, though. Back then I was thinking 2050 or thereabouts.

More to the specific point - decided to get out of the housing market (obviously fantasy island) late 2006, sold flat in Richmond Feb 2007, packed up and am now in a cheap 1 bed apt in Spain, with the dosh sitting in Banco Santander - which seems to me to be about the safest bank in Europe at the moment. Might buy a place in a couple of years time. See how it goes.

Global oil output has effectively plateaued (plus or minus a bit) since last quarter of 2004. I dont think things are ever going to be the same as they were since financial deregulation kicked in back in the 80's till this year. The name of the game isnt going to be growth any more, its going to be getting smarter at making do with less.

Edited by Esceptico

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Time to bump this?

The second leg down looks as if it is picking up momentum

I think you're right, and just like last time, it's most likely to happen at this time of year, between September and November.

In my opinion, as soon as the interest rates will start to rise, I think that's when it'll start to happen.

Then, VAT rise in January 2011.

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The second leg down looks as if it is picking up momentum

Agree - can't see anything at all on the horizon that could now push prices up, quite the contrary. I think the property market, in terms of transactions getting through to completion, is almost at a standstill now. Sentiment has changed. And no ammunition left to prop it up.

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Time to bump this?

The second leg down looks as if it is picking up momentum

Interesting thread.

Think that the one thing we've learnt over the years is not to make precise predictions of the UK market - there's too many imponderables to be able to get it right in the short run.

For me I started noticing things were wrong back in 2003/04 when friends who were my age started buying and were spending 5 times income on very ordinary properties in below average areas - sums of money that would've got you decent homes in good areas 6 years prior.

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Was late summer 2004 when it really clicked that things werent right.

I realised that the entire economy was based on debt and the expansion of debt. Of course this was unsustainble and had to end.

What I didnt realise was quite how bad it would be when it did end.

2003 and Andrew Oswald's prediction of a 2003-2005 crash

I didn't buy in 2001 as was freshly paying off student loans and skint with no parental help, wasn't prepared to take out 100% mortgage on a prudent basis, and then house prices went nuts, when IRs were lowered following sep 11th attacks. I decided I didn't understand why this was happening therefore I should not risk jumping into this market, and instead understand it. Been on various house price forums, the first bewing the FT forum, which was classic.

noticed at same time that it was a really good time to rent a nice place cheaply instead and get my student and early job debts paid down to zero in anticipation of future opportunities.

Edited by Si1

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I am so glad that I did not find this site back then. I bought in 2000 and then sold and bought again in 2004. STR'd in early 2008 and found this site in time to stop me going through with our intended purchase. Although, said purchase would have been at the bottom dec08/jan09 and with a mortgage rate that will never be seen again.

We shall see.....

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I bought a flat in 1998. Moved abroad a couple of years later and let it to tenants. Sold in 2003 because I was tired of the hassle and I felt a correction coming ...

In 2009 I came back to the UK and could not believe that the crash that I perceived as inevitable still hadn't happened. My family say I ought to buy "a place of my own", but I see no reason to get into debt for a pile of bricks whose value must tumble soon. Am I wrong?

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I bought a flat in 1998. Moved abroad a couple of years later and let it to tenants. Sold in 2003 because I was tired of the hassle and I felt a correction coming ...

In 2009 I came back to the UK and could not believe that the crash that I perceived as inevitable still hadn't happened. My family say I ought to buy "a place of my own", but I see no reason to get into debt for a pile of bricks whose value must tumble soon. Am I wrong?

No.

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Probably 2004, when lots of normal houses near me were being turned into flats, and advertised at silly prices! :huh:

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mid-05 when the BoE hiked rates. they leveled out for a bit and then continued going up, at which point i gave up calling the top. still renting though

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