Wednesday, Mar 10, 2010
Oh dear
Are we facing a second house price crash?: MSN
Recent reports say property prices are dipping again. Could this be the beginning of another downward slide?
Posted by mr g @ 12:24 PM (2601 views) Add Comment
29 Comments
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1. str 2007 said...
A reasonable arguement for further falls.
Some quite strange and conflicting bullish comments at the end of the article.
It does seem true that Bears are able to construct better arguements than Bulls. One Bull in the comments claiming land is hopelessly undervalued thanks to the greedy banks. ???? work that out if you can.
2. smugdog said...
"Are we facing a second house price crashâ Did we have a first? Sorry, but seemed to have missed that one.
Or are we referring to the early nineties, now that was a shocker, or so my old man tells me.
3. techieman said...
Although i agree its not time to be bullish about being bearish......YET, I doubt that even highly/lowly [take your pick? ;-)] geared smugdog, can be bullish about being bullish.....
A wait and see if the divergent momentum indicators indicate the secondary top. Remember the spring bounce? The bullish case must be in tatters if there isnt one.....
Interesting times!
4. mark wadsworth said...
I would assume that the second leg will resume, that way I can keep updating this chart and seeing how nicely the 1989 and the 2007 crash match up:
5. Mark Wadsworth said...
For avoidance of doubt,
a) Those are Nationwide figures
b) The two series start Q1 1989 (red) and Q1 2007 (blue)
c) After 1989, there were another two or three years before prices bottomed out (which are not on the chart).
6. letthemfall said...
When is a 20% fall not a crash?
7. rumble said...
Tally ho!
8. Mayalabeille said...
letthemfall said...When is a 20% fall not a crash?
When the fall is not enough to make the product affordable to people who could not afford it before, to me that is not a crash. I would call it a blip so I am still waiting ... still waiting ...
Perhaps one day...........
9. nomad said...
Well done smugdog. Lovinit! :-)
But who will have the last laugh?
10. smugdog said...
20% where? A bungalow in Brighton or maisonette in Mayfair (as one clever chap once put it)
Perhaps you live in a depressed area that's totally bombed out.
11. techieman said...
so smuggy you are bullish about being bullish? Or are you more OR less bullish about it than you were or "more or less" bullish? or just bullish.
Please dont confuse bullishness with optimism.... it ain't the same fing.
12. growler said...
Smugdog - you are right, we haven't had an HPC. What we've had have been tremors.
But it can go either way - and if the truth be known, noone can know.
(1) slow decline to align average earnings
(2) forced QT and subsequent IR rises
I can't see a sudden increase in amount forwarded to borrowers so it's got to be (1) or (2) with even money on each
13. bellwether said...
For some at least a heartening perspective from Barry Ritholtz. It is a comment in relation to equities (which can be viewed in full per link below) but it seems applied to all markets really. Reversion to mean is an incredibly powerful force.
"You must have faith that EVENTUALLY, the sorta kinda, almost efficient market will figure it out. That is when money returns to its rightful owners. There will be long periods of time when the blowhards, the jackasses, the arrogant, the ignorant will be eating better than you. During the dot com bubble, the dumber you were, the more money you made. Many of those who understood how silly things were missed out on the boom.
But this state of affairs is temporary. Eventually, the knaves starve to death under the oppressive force of their own ignorance. Be patient. The day of reckoning is often surprisingly late in its arrival, but it will not be denied. The beast must be fed."
14. bellwether said...
link
http://www.fundmymutualfund.com/2010/03/great-perspective-on-gamet-by-barry.html
15. down wave said...
Money Expert: http://www.dailyfinance.co.uk/
Mar 10th 2010
Filed under: Debt
The Citizen's Advice Bureau has confirmed that it dealt with a record number of debt-related problems in 2009.
The CAB's advisors handled 2.27 million debt problems last year, accounting for 60% of the organisation's enquiries. The firm also reports that it is dealing with 9,500 new debt and benefit problems every working day.............................................
And:
Adrian Holliday
Mar 10th 2010
Filed under: Debt, Economy, Banking , Election 2010
The Brown government needs to be clearer about its planned austerity measures. If it can't, then a downgrade
of its AAA credit rating looms. That's the view of Fitch Ratings. Fitch says that though plenty of other EU countries are getting their debt priorities in ordier, the UK is lagging....................................
Labour's Finacial Dam has cracks and its foundations are being undermined.
A May 6th election may well be too late for them.
16. hpwatcher said...
Spring bounce will be the key, in terms of perceptions.
17. Mike said...
The MSN article is probably one of the best written articles I have read so far that summarizes where we are right now.
Nice graph MW. Agree that the second dip is about to start.
After looking at a cheap house for sale here in Southampton I was amazed at the level of structural damage on the house. Cracked walls all over the place. Was even more amazed that a foreign bidder had put in an offer without even looking at it... This buyer probably also does not know there is a council notice on many of the lampposts stating the road is going to have a wacking yellow line down one side of it and will leave virtually no parking possibility for the occupants... Perhaps this is one reason why the dip is taking longer than expected. It seems there are a few stupid buyers around who to snap up everything which looks cheap when in actual fact they are a rip-off and they will get burnt badly.
18. matt_the_hat said...
Smuggy I agree with you house prices will always go up and I would not be shocked to see the average house being a million pounds in the next decade.
19. dill said...
Does anyone here volunteer to follow smugpuppy around with the poop scoop. It might be needed.
20. Chilli said...
Smuggy is completely correct. The crash did not happen. But smuggy hasn't been clear on his views as to wether a crash should happen or not.
I think it should.
All in all though, one important fact has been realised. And that is that houses don't keep going up. This might be obvious, but it seems house price bulls can only remember 10 years into the past. This important fact, once it dawns in everyone, will make a crash inevitable.
Oh well...
And to be clear; house prices will be fairly valued, when interest rates return to their long running mean. And house prices have stabilized. A this point, post all the carnage, I will declare the crash to be over.
21. Alan Lubin said...
Poop scoop? When the SHTF I imagine Smugdog's insides are going to turn out something more akin to oxtail soup. A mop and bucket will be a better investment.
22. timmy t said...
http://news.bbc.co.uk/1/hi/business/8558257.stm
Smugdog you didn't used to work at Prudential Securities did you by any chance?
23. symo said...
Hang on a minute, you can't go wrong with bricks and mortar, house prices never go down, no more boom and bust.
Oh wait people are actually realising the baby boomers have screwed us all over for a quick buck.
24. alan_540 said...
Yes.
25. mr g said...
Symo@4 "people are actually realising the baby boomers have screwed us all over for a quick buck."
Wrong there pal, house prices are at obscene levels thanks to the greed of the current 35 to 50 age group who see housing as a means of making a quick buck.
26. mark wadsworth said...
Mr G, symo, in the words of Monty Python, "Let's not argue and bicker about who screwed over whom..."
Clearly people have been screwed over, so there must have screwers as well as screwees.
The simple question is, how many people want to go back to the 1950s, 1960s, when we had low, stable house prices, and how many prefer the bubblenomics that we've had from about 1970 onwards?
It's quite simple - back then we had:
a) Domestic Rates and Schedule A taxation, which between them amounted to a property value tax
b) Strict mortgage rationing
c) Much more new residential construction - whether for owner-occupation or social housing.
d) We also also strict rent controls, which I think is a bad idea - if you have a) to c) then d) is counter-productive.
Since 1970, we've had
a) Parties competing to cut Council Tax the most (while merrily telling us they'll hike VAT by as much again as Council Tax raises)
b) Credit bubble after credit bubble, and taxpayer funded subsidies for banks to prop up mortgage lending.
c) Rampant NIMBYism.
d) We still don't have rent controls (thank G-d) but as I said, they are totally counter-productive.
Among old people (let's say age 70 or over) who 'got on the ladder' under the old system, how many of them are calling for (a) (b) and (c)?
It's a serious question, by the way.
27. vacuouspolitician said...
Is everyone from the city on this site? ...Bulls...Bears... More like Bullsh1t and Bearcr@p ...these terms have no purpose in the real world where ordinary people live. I find it all rather pompous using these stockbroker terms...surely this site is for people who are interested in house prices rather than speaking all this city b@llocks.
28. mark wadsworth said...
VP, in layman's terms, bulls talk bullsh*t and bears sh*t in the woods.
29. mr g said...
MW@23 "Let's not argue and bicker about who screwed over whom..."
I totally agree.
My interest in HPC is not for personal gain but to see a return to sanity.
As I have said before, there are people from different age groups who have contributed to the current situation therefore I find the same old mantra of "blame the boomers" to be puerile.
It's a bit like blaming Thatcher for today's financial woes, when there has been 7 years of John Major and 13 years of Labour to sort things out since she resigned as PM.