Monday, Oct 15, 2007
Still too nervous to make a prediction.
Telegraph: Enough humble pie, house prices will fall
Worth a read but Roger Bootle is being very cautious these days. He is appearing to favour the "house prices will stagnate" school of thought and say " ...the inhibitions to falling prices are quite severe. In the housing market, prices dribble lower rather than plunge."
Posted by talking rot @ 09:26 AM (930 views) Add Comment
14 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. taffee said...
the price to average earning does not even take into account the miras tax relief in the late 80's and lets face it the rise in personal debt and utility bills is through the roof.
Add mobile phone bills and sky etc....and people must be stretched beyong all comprehension
2. taffee said...
Oh and interest rates in the 70's were pretty cheap
3. tyrellcorporation said...
Taffee, I simply don't understand how people afford to live nowadays - maybe it's Gordonomics!. Every bill I get, bar none, is at least 5% higher than the previous one. My car tax bill has just plopped onto the mat, (another £205) and lets not forget that to pay £205 you need to earn £300. A couple of new tyres on my estate car will be £250 this time round and add in car insurance and the bill will nudge a grand! I lead a very frugal lifestyle and yet can only save about £8k a year. How do people have the cash to persistently piss-away on coffees and croissants at Costas? IMHO we really are heading for some type of crunch where people are maxed out. If the feelgood factor starts to wane and people rein in their spending this country is in big trouble.
4. su said...
"House prices have started to fall simply because they had become too high."
The property bubble may have been obvious early on to those with a financial or scientific background, but us normal people need a bit more time before we cotton on.
The VI spin of ever-increasing property prices is very persuasive, especially when it happens for several years in a row, but eventually common sense over-rules VI spin and people start realising the obvious: house prices are too high! Once that penny drops, so do the house prices!
5. taffee said...
tyrell
All bubbles end in the end.What you have said sums it up...very similar to 1929 depression start.
In 1929(when the song blue skies was written)people borrowed to buy everything and the rich had got richer whilst the average man in the street had not really.When the crunch came it was catastrophic....the suicide rate has always been kept under wraps but it was alot and was very sad.
6. Monty032 said...
I just sent this to Roger Bootle:
Dear Roger,
Congratulations on your very well-expressed article in the Telegraph. I do not think you need worry about eating humble pie for much longer. As a Lecturer in Finance I can't afford a house near Durham Business School - not a five-bedroomed detached, but ANY house. And I'm earning double the median wage in the North-East. On my estate of new town houses, my landlord is getting a 3% rental yield on the house, even taking into account the 20% discount Barratt gives buy-to-letters. When his 3% fixed rate mortgage comes up for renewal in May 2008 he will have to choose between subsidising me to the tune of least £500 per month, or selling up and facing a huge capital loss. A house opposite, sold for £367,500 in May 2006, has failed to sell at £295,000 and is now in a London auction with a guide price of £200,000. These examples indicate that the houing market, at least around here, has been pumped up by easily-available cheap credit and unrealistic expectations of continued house price growth, and is now highly unstable. I think the house price fall is already happening, though it may take a few months more for it to be reflected in the statistics, especially in London.
7. monty032 said...
I just emailed this to Roger Bootle:
Dear Roger,
Congratulations on your very well-expressed article in the Telegraph. I do not think you need worry about eating humble pie for much longer. As a Lecturer in Finance I can't afford a house near Durham Business School - not a five-bedroomed detached, but ANY house. And I'm earning double the median wage in the North-East. On my estate of new town houses, my landlord is getting a 3% rental yield on the house, even taking into account the 20% discount Barratt gives buy-to-letters. When his 3% fixed rate mortgage comes up for renewal in May 2008 he will have to choose between subsidising me to the tune of least £500 per month, or selling up and facing a huge capital loss. A house opposite, sold for £367,500 in May 2006, has failed to sell at £295,000 and is now in a London auction with a guide price of £200,000. These examples indicate that the houing market, at least around here, has been pumped up by easily-available cheap credit and unrealistic expectations of continued house price growth, and is now highly unstable. I think the house price fall is already happening, though it may take a few months more for it to be reflected in the statistics, especially in London.
8. This comment has been removed as it was found to be in breach of our Blog Policies.
9. taffee said...
sorry to hear your plight.....this is exactly the sort of lunacy out there.....if however, you can find £30,000 we will lend you £300,000 on a buy-to-let if you get a pay a back hander to an agent to make the rent square??????????????
outrageous
10. Davros said...
Nice one Monty.
11. A Saver said...
Apologies if someone has already pointed this out but mightn't rapid dissemination of info via the internet speed up the HPC this time around? Times have moved on a lot since the eighties!
12. sovietuk said...
The housing market is under attack from all sides now and it's difficult to see anything other than an economic catastrophe from all this. So much of the UK economy (in its present form) depends on selling, remortgaging and buying property. The present situation has to go down as one of the great economic scams of all time. It will all end in a bad way.
13. Hunthunthunt said...
Great email monty032!
14. Techieman said...
Yes but when will it end? The bubble may have burst or may confound some people yet. At the end 2005 people were saying it was all over - and yet here we are in 2007 after some big increases. The fact is nobody knows its over until its over, and in hindsight everyone will say - ah we knew it! Long term, asset prices will appreciate, RB being wrong (he predicted 20% falls in 2004 i think - i havent read the article) was very good, when the last bear becomes a bull thats when its all over. Im just wondering if we are there yet. I am a chartist and i'd love to see a proper chart - to see if it complies with Elliott therory. I.e. 5 up waves with 3 down. It looks from the HPC chart at the home page that the bulges in 1980, 1990 and now are highs. The Fibonacci number (golden ratio) of 1.716 X 10 years (1980 to 1990) and added to 1990 extends it to guess where?!?!? The first wave from 77 - 80 is retraced by a second wave - this is notrmal a retracement can be up to 90% (89 is the number actually). The move then from 1980 to 1990 constitutes wave 3 (never the shortest but often the longest). Wave 5 then 1990 - 2007 has its own 5 waves (4th wave being from the proir high to 2005 end) - it alternates from the 3rd wave - another Elliott rule. Therefore we have a 5th wave extention. So IF we are at the top where do we go now? Well Elliott states the 4th wave of one less degree. That takes us back to lower than the 90s (yep i know unbelieveable?) but remember this is a chart of Real Prices not nominal. The chart exhibits other toppy clues. I would love a "proper" chart. The best chart would be one of land values not house prices. Also its a bit hit and miss because of the huge regional variations. Its a bit like trying to predict world stock exchange prices from a World chart when you have divergencies amogst other components - eg Japan going down and US going up. Of course if it isnt over (i think it is but ive yet to see clear evidence in London where i live) then it will become more of a bubble, and since the downside (Elliott) goal remains the same it will be even more of a collapse. The last thing is how long will this take and will it form a classic A-B-C wave or just a straight crash. Because of the rule of Alternation an A-B-C looks likely. This means that there is a shallow fall which is not quite retraced (at least in real terms - in nominal terms there could be new highs) and then as people say well we have had the worst and thats all that has happened , the C wave decimates the market. The B wear is a trap which would also again make the bears look foolish. I have to scratch my head to say how long will it take, but lets wait for some more evidence of the top ..............