Warren BuffetCar

So unemployed people (remember unemployment has been rising for 5 months now, it hasn't done that since the early 90s) won't be forced sellers? This is a myth anyway that forced sellers are the only thing that can generate price falls. Imagine someone bought a house in 97 for 100k. 2 years ago house was valued at 250k. Now they want to sell but are told it is only worth 200k. You are suggesting they won't sell because they've lost 50k from 2 years ago. This is tosh. They will be quite happy to sell as they have still done alright. Maybe they would prefer to sit tight and turn down the good job at the other end of the country. Or sit tight in a flat while their family grows to 3 kids. But if you want forced sellers, you appear to be getting your way. Thousands each month.

I don't get your point? Rates halved during the last property crash. If rates are cut, it should be obvious why: 1) rising unemployment (5 months running) 2) sharply slowing retail sales 3) manufacturing in recession. Problem is that inflation is at a 7 year high, and the chinese revaluation and weakened pound is only going to fuel this, not to mention high oil prices. The only thing that would stop house prices falling is a rate cut below 3.5% (the bottom of the last cycle)... and even then, people can't really take on more debt. Its seems the bulls are clinging to yet another dream that they think will stop house prices falling. No mention of terrorist attacks pushing prices down from the Halifax, but all the talk about the Olympics pushing them up. Keep on dreaming. House prices are falling, and nothing can really stop them and the economy continues to weaken.

Historically, ie going back over the past 3 boom/busts, we've never really had inflationas low as it is today. the early 70s and late 70s/early 80s crashes both occurred at times of high inflation, leading people to believe that real prices might go down, but nominal ones never did. The next boom came along and the relatively low inflation might have caused some to think that real falls would be lower, as nominal falls wouldn't happen. Instead nominal falls did happen, and that in turn makes things much worse. People aren't inflated out of negative equity, and negative equity is the thing that causes real hardship and panic in the housing market. This time inflation is less than half what is was during the last crash. Again, some people think this helps the chance of a soft landing. The last boom should be a lesson to them. Relatively low IRs preceding it made it a bigger boom than previous ones, and a bigger bust. There is no reason to think that low inflation will help a soft landing this time - it will just make it more difficult and many millions more than last time are plunged into the joy of negative equity. Soft landings are rare, and with no inflation to help out, I suspect even more unlikely this time.

A "hockey velodrome". Isn't a "velodrome" by definition somewhere to race bicycles, not to play hockey?

Reduced to 189.9k Gawd, what on earth was it previously?

Those neat lawns, tennis skirts and nice houses were all there in the late 80s too. Didn't stop the housing market going tits up. So your point is...?

1) check out what happened after the last housing boom peaked then crashed. Interest rates fell rapidly to around 5-6%. In fact they've averaged around that mark for over 10 years. So current rates actually aren't very low, they are a little below the 10-12 year average. Does this really explain the explosive growth since 2001? Of course not! IRs fell to 3.5% and house prices exploded. IRs rise to 4.75% (ie up 30% or so) so house prices should fall 30% eh? Simple. 2) To think a govt can stave off a crash is naive. Don't you think they'd have done this last time, and for the one before?

I see hometrack even mentioned the election of a new pope as a possible reason for buyers holding fire. http://www.hometrack.co.uk/index.cfm?fusea...item&newsid=102 What are they smoking? Buyers last year didn't even pause for breath as IRs went up, they just kept on piling in. Now we are supposed to believe they are being savvy enough to take into account the general election here, or of a new pope. Personally I think election of a Nigerian pope would have seen house prices rising in Islington much more than a german. Yeah right. The post election bounce will be just like the one that was supposed to happen after the kids went back to school last year, or the spring bounce this year. And to believe Wriglesworth didn't see an election coming on May 5th. Gawd, how can anyone trust his predictions when he didn't even expect this - it was the worst kept secret for years.

Oh my god, living next door to Pompey, that's got to be my worst nightmare. I saw on TV recently that Pompey fans have the highest number of fans with facial tatoos in the premiership.

In the absence of option 3, then it will have to be option 2. No chance of me losing my job! Option 3 would be complete economic armageddon, irate mortgage holders storm downing street, Gordon Brown ends up hanging from some piano wire in Parliament Square, Tony Blair has to escape in a helicopter and live in exile with George Bush (until Bush can invade to restore democracy), Kirsty and Phil are kicked to death by a mob of bankrupt BTLers, and John Wriglesworth dies allegedly in a failed attempt to reach the moon.

What about early nineties, the Manic Street Preachers... Manics - Natwest-Barclays-Midlands-Lloyds Or the one in my sig, from the 70s, by Status Quo.

Labour claimed in 1997 an "end to boom and bust" and specifically stated that they would avoid a housing boom and then bust. They didn't avoid the boom, that is plain to see. I wonder if they will avoid the bust? Its not looking very likely at the moment.

I recall the bulls repeating over and over "soft landing", predicting (now quite laughable) that we'd see a "slowing" of house price inflation to a more "sustainable" 4-5% or so. But this didn't happen. The bears of course predicted 1) prices would stop rising 2) prices would start falling 3) mortage lending would drop off a cliff 4) sales volumes would fall dramatically. If we say that the market turned around June-July last year, we've seen falls of a few percent since then (according to Land Reg). Compare with the last house price crash and you'll see very similar falls for the same initial period of that crash. So far this seems to be a textbook example. All of the above 4 points happened last time. They have happened this time too. Hmmm, who were you saying got it right?

This is the usual EA misinformation. If you go to the official government stats website (I think it is www.statistics.gov.uk) and I think the office of dep PM might have some of them too, you will find 1) population (including immigration) growth is very slow, less than 1% per year 2) housing stock is growing faster than population (new house builds which the lenders like to talk about are lower than in the 60s, 70s, but you had mass demolitions back then). The important figure is housing stock, not new building, and total stock is growing faster than population. Don't believe it? Check out the official stats. 3) People have to live somewhere, if there was a shortage of houses then you wouldn't have all these empty new build flats in London. There is no shortage of housing, its just that people became obsessed with buying, and many people decided to buy 2 or 3 or more. Thats obviously going to put up prices. But don't confuse this with there being a housing shortage, there is NOT. People argued at the end of the 80s that it wasn't a bubble. They claimed Thatcher had revolutionized the economy, that there was a "paradigm" shift. It was more true then than it is now. Also don't talk about how healthy the economy is now. It all looked to be doing just fine in 1988 and 1989. But when house prices stopped going up, thats when the ecomony started going down.

Historically smaller lower end places see the largest falls during a crash or correction. At the end of a bubble the sheep pay as much as they can possibly borrow for absolutely anything they can get hold of - ie the cheapest properties. These are therefore normally more overvalued than other property during a boom, with the corresponding correction after the crash. As for normal negotiating margin, the house builders can still make a profit if they sell most new builds for 60% of what they actually go for. If you are only getting 10% discount in the current market, you aren't very good at haggling. On the other hand, if the market does fall 30% you could be sitting on a rather nasty paper loss at best. This whole argument about a shortage of property is complete bunk. There is more dwellings per head of population than ever before. If you go to the official govt stats site you can get the original figures. House building is lower than in the past, but on the other hand the 50s, 60s, 70s saw massive house demolition which is why house building was so strong. Check out the figures from the official govt statistics... the number of people per dwelling in the UK is falling, and falling faster than for many years. Population increase is minimal even with immigration. House price growth has little to do with population. Some of the areas with the biggest house price growth (scotland, the north) have falling populations. If houses were in short supply you'd see people living in tents on Clapham Common or in cardboard boxes. You don't. There are tens of thousands of empty properties for rent in London, and the Thames is lined with walls of flats that they can't sell. ... which has a bubble which is arguably bigger than the UK. You certainly like to take risks. I'd be permanently wearing brown underpants if I were in your position! Personally I'd rather be there with a big wadge of cash after the crash (which I will be) and buy when prices are at the bottom. I'll then sell at the top of the next boom, for there will surely be one - the UK public never learns.