Monday, Jul 23, 2007
What a great soft landing... can you believe that?
Mail: Housing market will 'grind to a halt'
The airplane "will shudder to a virtual standstill next year as aggressive interest-rate hikes finally start to bite, a leading forecasting group has warned". The airplane speed "dropping from well over 10% today to less than 1% by the end of next year, the Ernst & Young ITEM Club forecasts." The airplane altitude is "currently overvalued by as much as 16%, it warns." But do not worry, a crash is unlikely!!
Posted by confused76 @ 02:36 PM (176 views) Add Comment
9 Comments
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1. uncle chris said...
With such negative headlines in the press over the past 2 months, I wonder if these "experts" are starting to feel like King Canute yet or even 'Comical Ali'. Crash .... not a chance - no crashes possible here. Remember it was financial "experts" that told us that the dotcom industry couldn't lose. That was a BUBBLE and the UK housing boom is at the top of a BUBBLE. Check the markets in the USA, Spain, Ireland, France and now Wales if you want to learn what a bubble is all about. Time to wake up and smell the roses VIs.
To be honest, it's quite entertaining watching them all squirm, and seeing what rubbish they will come up with next.
2. david20040_0 said...
Unfortunately so far the experts have been proved right.
3. tipping point said...
Negative headlines are just an indication the public opinion is changing and that the tipping point has been reached. When a financial disater happens the media and society always like to have someone or something to point a finger at. The media is just wetting it's powder ahead of the crash they know but are not yet admitting is about to happen. Who will get the blame?
Gordon Brown
The MPC
The Banks
The Green Belt
Estate Agents
Cheap Chinese Imports
The Recent Flooding
Although the top three are most to blame I think the last three will get the most coverage.
4. Mark said...
the airplane is too high and wont crash, i suppose that depends how high the mountain it is heading for is.....
5. samone said...
Yes! This is exactly how a property bubble burst. Slow motion car crash. t happens over months not days so as the market changes people see the 'soft landing', 'cooling' etc...
We know it's a bubble from the figures, we know it's going to go pop. However I would disagree with blaming any of the above for causing it. Bubbles are irrational and are caused by the people in the market other factors are enablers. the MPC (or the FED in the US) reduced interest rates to stop major recession after the dot com bubble; people wanting to get rich quick saw property prices go up 1997-2001 and figured this is where the easy money is going to be made over the few years. This is the cause of the bubble, business have done well and used the lower interest rates properly (i.e. the software company I work for didn't a side line in BTLing) and that's one of the reasons we have low unemployment.
Just like the dot com bubble; its people who bought property/shares on the assumption that they will go up at the same rate till they retire.
Yes the government could create laws to limit the number of homes anyone can own but am sure that's not a vote winner in a market where BTL and home multiple ownership aspirations were growing, ditto for taxing it. Yes banks can limit the amount they are will to lend but they are competing with each other and the truth is that the more money they lend the more asset value their funds have on their books.
Some on the MPC do seem to be doves when it comes to making IR rises, but as Merv as being saying lately he can only go on the figures he has to work with.
In the end the people who caused this are the sheeple; the people above only enabled it to get this big. This is capitalism folks
6. harold said...
"Who will get the blame?" tipping point
The price of cheese? A shortage of winter warmers? The decline of the garden chaffinch? I.e., any old red herring, rather than the banks and governments that allowed our fiat system to be abused. samone, capitalism assumes sound money (i.e., asset based) - as our money is backed by, well, nothing, what we have is not really capitalism, nor are our markets free. What we do have, however, is an inflationary system which is guaranteed to transfer wealth from the poor and middle class to an elite.
7. Crash Bandicoot said...
The reason behind the soft landing statements is that people are in denial about falling house prices. It will take them a another couple of months before they will acept this as truth, then watch the sparks fly.
This reminds me of a classic quote that I heard a couple of years ago. There were plans to build an airport the size of Heathrow between Rugby and Coventry and a reporter went to one of the villages that could be destroyed and asked what effect this had had on house prices. "None at all" came the unexpected reply "It's just that no houses are selling!" - Priceless!
8. Orwell said...
Some interesting comments here, including:
"The housing market in North Oxfordshire has already ground to a halt. We have reduced the price of our 4 bed stone detached village property by £65k and we still cannot attract a buyer. The market is inundated with properties - not serious buyers - just looking thinking that they maybe able to buy the house of their dreams at a low price. In reality because they are looking at so many houses they can't see the good in any of them..."
Oh dear, oh dear, oh dear....(and these aren't even BTL's with wafer thin walls built on flood plains.....).
9. Dvi919 said...
Whilst I'm bearish and I agree there is going to be a correction in the market I think one of the biggest factors which has been overlooked is unemployment. Whilst unemployment remains low and inflation kept in check this bubble will keep inflated.
Also this talk of sub-prime loans devasting the US housing market is slightly off the mark. Remember sub-prime loans account for only 3% of the total value of the US housing stock.