Saturday, Nov 22, 2008
Celebrating the crash
Grauniad: Here's to the end of a nasty bubble
I love stories about falling house prices. Yes, there is the wretched prospect of repossession for some. Yes, there are years of negative equity ahead for the many. But who in their right mind thinks £200,000 for a new build flat is a good thing, while £100,000 is bad. Greedy developers and bankers, that's who. Plus the foolish people who thought buy to let was a road to easy riches.
The property market will recover. But when it does the goverment and regulators should not shy away from reining it in. If we're lucky we will never see real prices back at 2007 levels.
Posted by little professor @ 01:18 AM (1848 views) Add Comment
46 Comments
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1. quiet guy said...
Good grief! Any more of this and HPC will become the mainstream media. Nice find LP.
P.S. Do you think the UK population might become a bit annoyed when they realise what a huge con trick the housing bubble was?
2. amjidk said...
couldn't agree more, it's been a crazy period, tried to warn people about the bubble and how it might burst but the majority didn't want to know, so now it's time to face the music..
3. Daniel said...
More of this please Patrick Collinson. I seem to spend half my life ranting about ISP's, Banks, Telephone providers, British Gas [who say they are increasing their charges because of rising wholsale costs, then post their biggest profit ever, nearly 700% increase from the previous year] , Electric, Utility companies. etc,etc
Charges for not having DD, [when i pay on time anyway] Unfair admin charges, etc, etc, etc. [The other half seems to be spent resolving problems created by these suppliers]
Ofgem, Ofcom, etc. Totally Impotent governing bodies. Lying, sleazy, egomanical, duplicitous politicians. Who rely on the profits, these companies give to them.
I honestly believe that Big business has copied the examples of Brown and Blairs government. The government introduced hundreds of so called 'stealth taxes'
As a small business owner, you could no longer reclaim 100% tax relief on capital equipment. No VAT return on purchased company cars. Stopped many many other legitimate expenditures, you used to be able to get tax relief on. The list goes on and on. [Which is maybe why the present PM, when he was chancellor taxed this country in excess of £40 Billion pounds. Pro rated, I believe this is the highest the UK has been taxed by any chancellor in our long history}
And big business just followed their example of screwing the populace for every penny they could get.
Theres no accountability. They can do whatever they want. We are the indentured proles.
Can I suggest a lot more anger, and righteous indignation for your next piece?
That would be a lot closer to the mark about how the entire country feels.
4. Tenyearstogetmymoneyback said...
quiet guy said
"P.S. Do you think the UK population might become a bit annoyed when they realise what a huge con trick the housing bubble was?"
The current population yes. On the same note going back to the 1990s bust I was so relieved to get my money back in 1999 that I haven't owned property since.
However, the problem will re-occurr when todays fourteen year olds start voting and buying houses.
As way back as 2002 we had to explain to a younger colleague that house prices had actually come down in the past.
Luckily (for him) we didn't put him off buying his two bedroom maisoneete in Bournemouth for £99000. If only I could
get one for that price now.
:- Duncan
Bought 1989 £65500 Sold 1999 £70500
5. Rentedroof said...
Incredibly the majority of sheeple still don't want to know about the implications of the HPC
I was chatting with two female colleagues the other day, both in their early 30s, both just in the process of buying houses in London in the £300k - £400k range and both saying how they'd got them really "cheap" (15%off asking). I gently suggested they'd probably see them decline in value in the next year or two and they were actually surprised to hear that! One then piped up.."well, prices are bound to right back up anyway" as if that was a good thing. One of these women actually works on Beeny's 'Property Ladder' fershrissakes. This generation have no grasp of just how negative high property prices are.
6. planning4acrash said...
"Grauniad: Here's to the end of a nasty bubble" - But can we avoid them in the future?
7. planning4acrash said...
"Do you think the UK population might become a bit annoyed when they realise what a huge con trick the housing bubble was?" - I know I was, but, one mus understand inflation, fractional reserve banking, the shadow banking system, complicity of government and business, etc, etc, to cut through the matrix of propaganda. I guess that's what we've all been trying to do here.
8. str 2007 said...
P.S. Do you think the UK population might become a bit annoyed when they realise what a huge con trick the housing bubble was?
I'm not sure they ever will realise.
I will also bet you that alot don't believe house prices are crashing and if they are it's just a temporary blip.
Only last night I met a BTLer (not his main job) who dropped some property particulars out of his pocket.
His answer when I exclaimed '' tell me your not buying anymore houses now '' was - this ones only up for £210k and it's got £180k written all over it.
Absolutely unditerred by the current crisis - a buying opportunity.
I guess some of our glasses are half empty and some half full.
He may find his completely empty or 100% negatively full soon.
9. str 2007 said...
BTW guys (& I apologies about taking the subject away from the article)
Gold was up strongly against all currencies this week (not just GBP weakness)
Wondered if any of you think this is a temporary blip or something of a tuning point or the beginning of a rally.
10. planning4acrash said...
STR 2007 - You can take some of these links I've been posting, and e-mail them to him. Send him short podcasts about inflation, the austrian business cycle, your talk with that chap was your chance to give just a small bit of info, ask him something like, "What is money?" - "What is inflation?" - Explain it and the implications, then offer to e-mail, write a link for them. Maybe keep some url's stored in your phone on something else, so you can write them out for them.
11. whostolemyendowment said...
I sold up in late 2005 (still took me 8 months to sell 'way back' then). When I told people (firends and family) that I had sold up and was going to pay off some bills, buy an old VW van, and rent a place for a couple of years, and see what happens....were there any pats on the back?.....NO! I got the same old cr@p, 'renting is lost money', 'why pay off someone else's mortgage', 'well what are you going to invest in instead?' 'savings are for fools' etc etc {...except I rent a small cottage of the Nat Trust - so am quids in)....Now I think I'll probably rent for at least 5 years, which will take me up to the end of 2010, then think carefully about where I go from there.
Yes - renting is handing over money, but so is a mortgage on a depreciating fixed asset - on a property you'll probably have to sell at a loss. I least I know where my money goes.
The whole homeownership (debt ownership) ponzi scheme makes me want to puke!!!!
12. phdinbubbles said...
"Do you think the UK population might become a bit annoyed when they realise what a huge con trick the housing bubble was?"
They'll all suddenly become experts on how obvious it was all along and then blame it on the banks/estate agents/kermit the frog/etc for their greed and start insisting that they should be bailed out of their mis-sold mortgages. This was already happening on one of the "Have your say" bits at the bottom of one of the Times articles from yesterday. The truth of the matter is that it was the greed of those borrowers that thought they could make an easy buck that played at least an equal part in creating the bubble. The idiots that took out ridiculousy over-sized mortgages will not beat themselves up about it. Were they concerned when people pointed out the squeezing out of first-time buyers? No. Did they take on board advice from people who pointed out to them that a bubble was forming? No. Did they insinuate that those that chose to rent instead of buying were just jealous? Yes. Did they sneer and say those that hadn't bought were bitter and twisted and had missed the boat? Yes. Should we be concerned about them now? No.
Rant over
13. letthemfall said...
whostolemyendowment: Ditto. I was even told I was taking a gamble renting. Less of a gamble than buying I thought. But this is why bubbles have always formed and always will form. People tend to follow others, and it is very difficult not to go along with it.
14. titaniccaptain said...
STR2007
Wait untill after the midlands meet before buying gold I hope we can all get some perspective on buying gold............If I am going to buy gold it will be straight after the meet and probably from gurnsey
15. gardeniadotnet said...
9. phdinbubbles said.. The truth of the matter is that it was the greed of those borrowers that thought they could make an easy buck that played at least an equal part in creating the bubble.
Imagine I knowingly feed my hens contaminated grain and they become sick.
How would you apportion the blame?
a) it's the hens' fault.
b) The blame should be apportioned 50:50.
c) it's wholly my fault as an irresponsible hen keeper.
16. phdinbubbles said...
The hens don't know the grain is contaminated. Nobody pointed it out to them.
In the case of the housing bubble - plenty of people repeatedly pointed out that there was a bubble. Did they listen? No. Did they overstretch themselves because they assumed that the value of the property would rise anyway and they would be richer? Yes. Did they take financial repsponsibility for their lifestyle? No. Did BTLers buy up loads of houses with the expectation they could make easy money? Yes.
If people have no more ability to think for themselves than chickens who have been fed contaminated grain then I would agree with you. But they don't. I was aware there was a bubble - so how did that happen? I would find it an extremely depressing to think that humans have no more ability to think for themselves and take responsibility for their behaviour than chickens. Do you really think that there is a hen-keeper in charge of humans that should take responsibility for the welfare of the unthinking humans?
17. gardeniadotnet said...
13. phdinbubbles said.. Do you really think that there is a hen-keeper in charge of humans that should take responsibility for the welfare of the unthinking humans?
There isn't, but there should be.
18. phdinbubbles said...
Yes, quite right. Let's find a suitable hen-keeper to look after us. I can get myself lobotomized and never have to worry about things again. Well, unless it happens that we misjudge the hen-keepers character at the interview and he starts feeding us contaminated grain.
19. Orwell said...
People. We know you love us so we shall give you words of wisdom.
Buy buy buy like there is no tomorrow. The market will only rise next year and you will all be left behind!
Love Krusty the Clown and the Fool (aged 17 and a quarter).
PS we'd love to join you but we are doing some property investigatory work in the tax haven of the Bahamas.
20. Gotout2006 said...
The PBR is saying they will give people a 3 month's holiday on there mortgage payments if
they fall behind. Will the mortgage payer's who keep up with there payment;s want the same deal
21. str 2007 said...
Thanks P4AC
You sometimes it's better not to try and help people, I don't mean that in a negative way, but that is how they would view you by helping them in that way.
I raised eyebrow and an answer to a question if they ask it is all they should get.
BTW his wife is an accountant who's invested in new build BTL up North somewhere so I doubt it will be long before they realise the error of their ways.
Personally I don't blame people for wanting to better themselves, I blame the system for allowing property speculation to be one of the ways people use as vehicle to make money.
TC
Seeing the way it's moved this week makes you think you've missed the boat (wait for it - S2R1 told you so). Seriously though only a couple of weeks ago it was £445/oz and today as I type it's £532.49 - that's 20% increase in a couple of weeks. Which to be fair is the volatility I was seeing and it's this which kept me from buying purely for the fact it moves so quickly that if you're not watching by the hour you could end up loosing thousands.
I feel in a way I've lost thousands in the last couple of weeks by not buying, but I haven't really as my savings are sterling house money. I just haven't made a gain and who knows the Gold price may shoot down again 20% over the next 2 weeks.
22. bellwether said...
Come on guys there's nothing wrong with the property crash porn (because that's what its become) but the sense of superiority is a bad brew. We are talking about ordinary people, not chickens or sheeple or whatever. People who got mostly frightened by the possibilty that owning a home might get out of their grasp. Fear and greed and envy too but these are factors that runs through us all. I also suspect that for all our sense of presience over land and housing we will almost invevitably be wrong about what happens next. I see nothing in the predictions on the site that seem to me to carry much weight. Bits here and there but nothing as consistent compelling as the view that house prices would fall.
23. str 2007 said...
Gardiniadotnet/phdinbubbles
LOL
I wouldn't mind being a hen keeper and setting some basic rules for the population (without restricting enterprise)
Two reasonable rules would be :-
1/ Have your living accommodation bought and paid for a good 5 years before you retire (this will allow pension top up in last 5 years of work if it's looking a bit short).
2/ Assume you'll be able to achieve a 5% return on your pension pot on retirement. Therefore if you want a pre-tax income of £15k a year you'll need £300k put aside.
Fairly basic rules but I'd guess alot of people are on permanaent Interest Only mortgages.
I also bet the majority of those people don't have any sort of pension provision.
Unless the City sharpen up their act - alot - I wouldn't recommend people buy a pension either as none seem to perform. Annutities also seem to me to be a total rip off.
24. quiet guy said...
"there's nothing wrong with the property crash porn (because that's what its become) but the sense of superiority is a bad brew."
It's only human nature to feel satisfaction in seeing a personal finance plan bear fruit after years of waiting but you're right of course.
"I see nothing in the predictions on the site that seem to me to carry much weight."
Do you know of any better places to get predictions about the future of the house market?
25. bellwether said...
STR 2007. I've had an account to buy gold all year and haven't bought any. If the boat is a small and unconvicing % increase you are as well missing it. I've heard almost equally compelling arguments that gold might trend up beyong $1000 oz or down to $400 or so from here. It's just too unpredicatable right now. Over the past 6 months you would have been better housing your sterling in $ or Yen rather than gold. Over the next 6 months who knows but beyond sterling being a bad bet wouldn't bank on gold. If the movement becomes compelling enough you will have time unless you are looking to buy physical which personally speaking doesn't interest me beyond the fact that it looks cool as fck.
26. greytornado said...
The gold comments are interesting - price went up rather sharply yesterday afternoon - to £530 per oz. A lot of people are buying physical gold. The Australian Mint, (the equivalent of our Royal Mint,) has just suspended sales of gold coins. I don't think that the Royal Mint will follow suit - Gordon Brown doesn't want to alert people to what's going on. I'm not normally one for conspiracy theories, but 30 mins ago I searched on Google for 'Australia mint suspends sales'. Got loads of hits. Looking at one hit and PC did a wobble. Searched on same parameters 10 mins later - only one hit. (Plenty of old hits on the US suspended sales.) Perhaps it's me just imagining things..........................................
27. jamonit said...
STR 2007... http://www.marketwatch.com/news/story/gold-surges-more-6-safe-haven/story.aspx?guid={63F6CD32-D668-4333-8C4C-BEB3A00BF84A}
28. bellwether said...
I guess I think the lead for houses is in the macro and read everything from main stream press to hard core doomsters. It's difficult to tell who's right and I tend to think that if an article is well written there is probably a decent level of thought behind it. The past few days I've been reading Market Oracle. I'm particularly fond of AEP on the Telegraph because he uses words like chealting and can because he can pretty dramatic at times.
Personally I think it is a brutal down for property but given the impact this will have on the ecomony I worry about the effect this will have on freinds and family. Recession lite suits me fine anything worse and I'm begging for whatever solution can be found. G20 want to move the decimal point and devalue currency its fine by me.
I'm not hardcore because hardcore needs a sense of optimism that contains a futility that defeats iteself.
29. bellwether said...
sorry last comment was in response to quiet guy
30. titaniccaptain said...
@STR2007
Good points there but I think that if we are going to see a rally it will begin in a few weeks.....basicly if people are going to go to gold in droves then this is only the start of its upward move.......just a hunch..but my hunches are better than quasi modo's........I have never been a real gold bug thats why I have never bought it but.......For the past few months it really is pricking up my ears....
31. bellwether said...
a bit about gold story if you care for technical analysis
http://www.marketoracle.co.uk/Article7335.html
32. phdinbubbles said...
@17. bellweather
I agree with you. I did feel rather sorry for one of my mates the other day who was telling me they are now in negative equity after buying a flat a couple of years ago. Of course not all those that bought over-priced houses over the last few years were driven by speculation - I'd like to think of my earlier rant was more of a counter-superiority reaction to those who dismissed my reasoning over the last few years and those that shamelessly bragged about how rich they were becoming- (are you going to sell and live in a tent then?- or rent? - sorry i've started ranting again).
33. titaniccaptain said...
@Bellwether
Thanks for your sobbering input .......but I have one simple question and I think it needs answering.........if everyone tries to put their savings into Gold.............what will happen to the price of gold?
34. bellwether said...
cheers phd, the btl'ers can hang, not because they did anything fundementally wrong in my book but because of their tedious sense of infallability. That said it was great business model if you got in early enough. If things to reset to 1995 in my life time, I'll know what to do!
35. greytornado said...
Looking at gold: - simplistically - it's another form of money and it's been around for thousands of years. Most other forms of money are just paper, and when all goes pear shaped are still just paper.
36. bellwether said...
Simple questions are the worst! If over time then a bubble would form until there was no money chasing it. If everyone switched all at once then effectively nothing as there would be no money left chasing gold?
37. A Solovine said...
12. gardeniadotnet. The flaw in the chicken analogy concerns choice, not merely knowledge. Chickens eat what they are given, because that's what's available. But there was an alternative course of action for those deciding whether or not to try and get rich quick by buying property predicated on its perceived value escalating ad infinitum: don't. This was not a live or die choice, unlike the choice for the chicken; eat or starve. It was founded on the dual and wobbly pillars of avarice and stupidity. Even given a disregard for common sense and decency, unbridled ignorance of history and holding in contempt everything our fathers taught us, is there a single example of a trend in economics that continues in one direction without a significant risk of change? Is there a single example of a phenomenon in ANY sphere of human experience that continues in one direction? For ever? Yet what is so egregious about this episode, is not the greed and ignorance, but that those who are now being expected to pay for it are in many cases truly innocent of involvement in this fiasco. Mr. Darling is about to announce a 'Spend now, tax later' strategy that on a relatively parochial scale encapsulates the shame of what's happening, because those who will have to pay the deferred taxes not only had no say in their being levied, but did not benefit from the excesses of the past for which they will be used to pay.
38. jamonit said...
Bellweather, surely a problem with these technical analyses is that they're based on historic behaviour patterns. These are unprecedented times and so surely such chart based analyses become less reliable. ie anything could happen and it's about instinct and reading immediate and short term events shrewdly. Not that I understand what the chartist is on about if I'm truthful.
39. str 2007 said...
Jamonit
Thanks for the link, some interesting comments in there. As usual everything from $1475 oz by April to a temporary blip in a bear market that will see it back to $475 oz.
TC
Here is a the link again, I read the 1st page of comments - worth reading.
http://www.marketwatch.com/news/story/gold-surges-more-6-safe-haven/story.aspx?guid={63F6CD32-D668-4333-8C4C-BEB3A00BF84A}#comments
Bellwether
I'll have a look at your link now.
40. bellwether said...
GT but once you get to that level is it not the capacity to exert force and coercion that matters
41. bellwether said...
jamonit I haven't a clue what will happen to the price of gold but if there are convincing price movements I'll buy it. I don't really see gold as special in any sense though and think it is less of a safe haven than people think because it operates a little out of the system. It has been confiscated before.
42. str 2007 said...
bellwether @12.12pm
Thanks for that link - long term bearish down to $480 with a stop at $650 apparently.
Seems like the experts can't agree - what hope have I ?
43. wiltshire said...
Bellwether @ 17, I'm 42 and therefore old enough to remember the housing crash of the early 1990s. I didn't own a property at the time but the housing situation was glaringly obvious. Now, I think that the majority of the 1000s who are now crashing and burning should be old enough to remember the last crash/have parents/family/friends who remember it. What's the old adage? "Those who ignore history are condemned to repeat it". A few more people in this country should have shown a bit of backbone and not just followed the herd.
Agree with you about the future. We are in an unprecidented and historic time. Predictions are difficult in far more tranquil times than those we're in but it will literally be an Economic Miracle if this housing market is saved.
44. amjidk said...
The thing that used to piss me off the most was that people assumed property prices would rise indefinitely, i can remember an argument once with a relative who had a similar view, apparently he thought prices would rise to infinity... what an idiot!
45. stillthinking said...
Housing market !
What about a sterling crisis and 3 million unemployed ! I think its a given that the housing market is toast. I am just hoping that we can keep our jobs. But it is the site. Housing will collapse until foreign buyers from europe step in. For them price falls are about 50% already. If they haven't spent much time in London some of the rich ones might conceivably want a little pad there for holidays.
46. titaniccaptain said...
Thanks STR2007
the comments show a diversity of opinion same as here lol..its a tough one to decide........but im keeping open path to buying it quick should the market point that way more openly..........what is strange is that the demand for Gold is not reflected in its price........