Monday, Feb 25, 2008
Cooling rapidly, despite the hot air
FT: Britain can no longer depend on being cool
"A house price crash would take time to unfold. Assuming a constant inflation rate of 2 per cent a year, nominal house prices would have to go down by about an unprecedented 25 per cent if the decline stretched over six years. Remember: the first stages of a housing downturn consist of denial followed by anger. A fall in actual prices is a relatively late-stage phenomenon of a housing crash."
Some substance from the FT. Unlike the witterings we get from our unillustrious chancellor.
Posted by letthemfall @ 10:17 AM (384 views) Add Comment
4 Comments
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1. george monsoon said...
sorry, I cannot agree with this article for several reasons.
Inflation is WAY above 2% which in theory would extrapolate the issue of a slow crash, but in reality, we all know that wages are not following inflation up, so prices must CRASH in order to generate house sales.
They are, they will and because I dont have any bloody GOLD like 90% of the articles posted on here in recent days, I don't really give a damn about it. It may well affect world finances, but what can I do about it, nothing.. Im just going to wait for this crash to bite then buy a home for my family.
2. alan said...
"Assuming a constant inflation rate of 2 per cent a year". Try using the same arguement with RPI. Factor in a medium rise in the coming few months.....
..gives...price drops of (say) 4% this year, 2.5% next year.
However, an economic collapse caused by debt and bad financial management bringing down London as a top financial center would change the outlook! The probabilities rise by the day, my mates are being quietly offered redundancy on Canary Wharf!
3. theboltonfury said...
i agree with George. The obsession with GOLD on this website is demented. Start your own site and call it something like www.goldpricegrowth.com and chat away about it there!
I read a gold thread once and it's like a collection of wannabe traders all trying to out jargon each other - yawn
4. paul said...
Actually, gold should be of less interest than it is. It really is true that all that glisters - and the off-yellow rock is no different.
If you actually normalize gold's price growth, you would not have been significantly better off investing in gold 20, 50, 100 or even 200 years ago, principally because it is a commodity (subject to volatile price fluctuations), offers no return (short of selling it) and relies completely on asset growth. When the value falls below your buying price *bang* you're losing money, no question.
It is deemed to be a hedge against inflation, but only because everyone believes it to be.
Like money, when people start losing faith in its value store, the game is up. Which is exactly what's happening to the USD and GBP.