boom_and_bust

http://www.statistics.gov.uk/articles/econ...vity_update.pdf OECD recent measures of economic productivity amongst the industrialised nations ; France +23% per cent more productive per head of GDP than the UK with a far shorter working week and higher minimum wage. Ranked third in the group. UK seventh. And ; http://www.parliament.uk/commons/lib/resea...98/rp98-064.pdf OECD measures of GDP per head (true wealth of individuals and Nations); France 7th in the world and ...... oh dear ....... UK 24th. So why exactly do they need to copy the miracle HPI uk economy again? They are wealthier, more productive, have a better health, education and transport system but didn't need to fund it with HPI NuLab votes.

Hi, I have a home in France. I worked in the sophia antipolis technology belt, in the south, for three years. I still have the place there and spend as much time there as I can in the winters. Go live there for a bit. You have to be absolutley stark mad to compare the quality of joe average here and in many parts of france, Clichy-sous-bois and Marseille dock side exempted. Unemployment is more truthfully expressed in france, there are far higher unemployment benefits and particulalry younger people are less hurried to grab the first employment they can to put food on the table, in general terms. It's not ideal on many repects but let's not get europhobic. and despite a housing bubble in the big centres, that still means a house for £80K even within reasonable distant of Paris is possible - with similar wage levels. France is one of the world leaders in high technology development and engineering. IBM chose france as it's european headquarters back in the sixties due to it's education and expertise in this area. The arienne space programme comes out of Toulouse, the world's largest builder of satelittes as does Aerobus, now the world's largest aircraft manufacturer, above America's boeing. Vivendi and Universal, until recently, the world's largest media corporation, based out of Calafornia, was entirely French owned. France also leads the world in renewabe energy research, both in Tidal power generation (the Mont-St-Michel tidal dam), Hydro-electro and next-generation Nuclear-fusion research, for which America is the biggest investor. Renault also own one of japan's largest car maunfacturers into the US - Nissan. Do we need to go on? The view of beauracratic france is much beloved by UKIP and the like, the evidence doesn't actually fit the picture. And here the economists have been advising that Nation to embrace the virtuous HPI model?!?!!? Why? People live very well without it on the whole there. They do rank far above the UK in OECD measures of living standards. Let's not drag that no-brainer into the arena.

Hi, Hummmm......what is the source of your figures. Correct me if I am wrong but I seem to remember that Adolf rose to power through the German workers party despite being an Austrian native, summoning up popular support within Bavaria as a reaction to the particularly accute depression suffered by southern Germany and Austria under the Northen, Berlin based government of the time. Did house prices never fall during the 20's in Austria despite a more sevre recession than most other parts of Europe? Still, I bet there are hoards of Swiss people queing up to buy lakeside holiday homes in Slough or Dagenham.

Hi, A dedicated trade show showing you how to, in their words, 'wave goodbye to Britain'. Hummm, signs of a happy nation under Tony and Gordy's miracle HPI economy. www.emigrate2006.co.uk

Hi, Think about it. To buy now you are banking on 70's style inflation coming back to haunt the economy. The ladder as it is does not exist. I would imagine it to be very depressing to come home to chavsville every night, knowing you are sacrificing your life for all the misery, you are accepting some kind of dickension position in life, probably the best part of your life, IF inflation isn't to explode or house prices fall. A status quo doesn't work. Read about the industrial revolution, read about the displacement of the landed gentry and the loss of the British Empire in the face of superior Americain, French and japanese industry and entrepeunrialism. There is something brewing in the world economy for sure, I sincerely believe that inflation targeting in anglo saxon economies has failed miserably and we have reached a crossroads. The thread above regarding M3 money supply is all tied in. In the past, with both supply and demand side economic policy, when it failed, the result has been either a sustained period of deflation or inflation. Question is, which side will give? It's starting to feel increasingly like a large dose of worldwide inflation. We are already there in many regards. Gordon threw away any meaningful inflationary measures a long time ago, hence why the policy of his government is so discredited, we have already had the inflation genie unleashed, it's just been hidden away and dismissed in the form of house prices, council tax and government spending. But if they do not abandon the farsical inflation targets, house prices WILL have to fall. Britain just is not structured for a low value currency exit from the mess. That's the thing to watch, if the BoE increasingly miss their inflation targets, get ready for a repeat of the 70's. That might mean no HPC, it is however unpleasant in many more ways than can be imagined if you have never lived through a hyper inflationary era, it has always lead to economic and social breakdown, without exception. Can the government really take that on?

Hi, It's a fair point, who knows? I can't help thinking if that people are sharing HMO in the first place, buying or renting a sole place is very unlikely wrt cost. I can see a lot of younger people going back to parents or sharing a room with a mates house on a casual basis, particulalry in the big cities. The HMO wording is very ambigous anyway, it does not strictly mean 5 students or weekday city workers taking a bedrrom each. It can apply to virtually any situation where more than a coiple of people are under one roof and exchange of money is occuring. It could boost the spring rise, it could flood and depress it maybe, there is always a spring rise though so the next couple of months is interesting to see if amateur BTL really have any sway in the market.

Hi, Well, we knew it was coming in last year, I was interested to see some of today's and tomorrow's papers running the large page adverts from the Deputy Prime Minister's Office regarding the looming property licence act coming in this April. Infact, if you go over to the ODPM and take a look, you need to declare how long you have been renting property as a landlord and that information is shared with the inland revenue. Nice one Mr John Prescott, I always thought he was a sterling chap. http://www.telegraph.co.uk/property/main.j...04/ixpmain.html It's spring again, it's spring again, tulips from Amsterdam, oompah, oompah, ommpah. Boomer

Hi, Marketeer is keeping an eye on reentering the property game on SP; There you have it, straight from the Bull's mouth.

Hi, Asking the assistance of our resident charists. Interested to see if a link exists between the proportion of foriegn investment in residential housing and commercial real estate for the UK during the past boom, the monetary figure, possible implications for currency stability and currency flows around the trade deficit. Boomer

Hi, In response to your PM to me, I am currently a male chimapenzee waiting to have a sex change operation if the bank manager agrees my MeW facility. But I am still not intrested in joining Amway. Boomer

Hi, Therein lies the problem, the problem with our (human) nature, unlimited wants and inflation. Most economic policy is at it's heart aimed to constrain people's avarous wants, inflation is the outward expression of that in our measures of the goods and services we can consume. Problem being that left unchecked, it gets to the point of self destruction. You mention Keynes. You could also mention Milton Friedman or any of the current exponents of inflation targeting monetary policy. That will also shortly be consigned to the dust bin of economic experiments by governments. As soon as you plug one leak, another develops and we all know that the inflation figure the ONS manipulates has little to do with real world inflationary pressures. It's failed policy, hyper inflation in the housing market is quietly dismissed but it's all inflation, in the long run. And the more wealth many individuals get, the more they often get a taste for more, it's difficult for many to moderate their behaviour, maybe just stick it in the bank and forget about it, all due to our wonderful human nature. As soon as the FTB's, trade uppers, divorcies, or whoever are inreasingly priced out of the game, the smaller minority will increasingly turn on themselves, try to screw eachother over. People will seldom sit back and say 'ah, that's fine now, I'll just sit back now'. As soon as many people do that, they are not far away from the grave. How many real life stories of some people retiring do you hear where they pop their cloggs just a few years into it, lacking that inner motivation or drive anymore? Once you've had a strong enough taste for it, if you are that way inclined, you lose that ability to make that stance anymore, it is very difficult to not feel that you are moving forward in a similar way anymore. Peer groups, self esteem, self achievement, all the inert influences playing on peoples wants and aspirations. Look at the history of our societies, look at why so many governments are so scared of the destructive repercussions of inflation. There is plenty of pay back inflation stored up in the current situation, it's just not tenable by any measure, even more so in today's globalised world where people can want and demand ever more and take ever increasing risks as long as the easy credit roles. It never does though. If you are sure you can pay your costs and swallow a fall in your house pruchase, then it doesn't matter too much for you individually. If you can't, it will rectify itself sooner rather than later, always has, always will.

Hi, And remember this is only a few weeks after foxton founder Jonathan Hunt cashed in several millions worth of debentures, just as the firm announced a heavy year end fall in profits. Boomer

hi, And rival building firm Theodore Kaczynski partners ltd., has also partnered up with the government's affordable housing initiatives to bring a stunning slelection of 1 and 2 room 'unabomber chalets' within sustainable community environments (prices start at a mere 65K, pictured is the flagship, executive chalet showhome).

Hi, Inflation targeting has been discredited under the current chancellor. You can't make it the central plank of monetary policy then fudge and manipulate it until it is meaningless. Demand side monetary policy became discredited in the 60's-70's, supply side monetary policy in the 80's-90's, the experiment in inflation targeting will also be consigned to the trash can of experiments sometime soon, markets pushed the other two forms of policy to the brink until breakdown, I guess asset inflation and debt will be the breaking point of inflation targeting monetary policy, in hindsight. Boomer

Hi, I have to say it, persimmon have been a heavy share tip for a good year or two. I've stayed away from residential property shares so I didn't pay much attention, I think if you go on several popular online share dealers, you'll get the low down on their above market performance (it was maybe sharecast or digitallook that were tipping them heavily a while back - that would be a good source to start because I can't remember why they were a hotstock). Boomer

Hi, Whatever spin you read at this time, it really goes to show what a shambles the chuckle brothers, messers Bliar and Brown have inflicted on the housing market and HPI driven economy. Income multiples reach record levels, debts and insolvencies reach record levels, home repocessions are reaching the levels of the last big crash and sharply spiking upwards YET, people are urged to hock themselves into even higher levels of debt and unaffordability when clearly people are struggling already. Houses became way overpriced at the height of a boom a year or two previous and now the economy and people are drowning in debt, unable to meet values that the Uk economy and citizens cannot support. Is it really anymore complicated than that? Boomer

Hi, I don't think for that. Kirsty's boyfriend and her faimly are loaded (even though a faimly house, living near to your parents, when they are in one the most exclusive hotspots in Ken, is not going to be less than £5m). Humm, it's interesting to think why she would concede the crazy market situation now, it's definitely not to do with personal money, it's something else. Still, I think the saying is, hate the sin, forgive the sinner.

Hi, Just a point, it's been investigated a few times here before. The UK housing market is far from the model of perfect demand and supply economics, transactions in particular can mean one thing or another according to the market conditions. Comparing the behaviour of the previous two crashes and crashes around other nations in the past, rising transactions can be consistent with a falling market. It has in the past, BoE published a paper on it. Eventually, when many sellers are not selling, a nice price low develops and pulls in some new buyers, showing up as an increase in transactions and a fall in prices. That is to say, a fall in prices stimulates an increase in demand, as you might expect. This is what happened pretty much between 1991-1995 when transaction volumes were "flying off the shelf" but prices were freefalling, upwards of 30-50%. The more interesting bit is the preceding high before this stage. If you check the figures of CML, land registry, you see in each instance that the initial high of transactions and prices reach the market top before transactions plummet but prices hardly react initally (1989-1990 last time, 2004-2005 this time?). The "sticky downwards" nature of house valuations until market realisation and ensuing credit and liquidity crunches getting to work. Gazumping on the way up, gazundering on the way down. Unfortunately, these take some time to filter down to the land registry and CML when approvals and valuations are recorded as a final sale. So in the two "transactions" relevant stages of the downward cycle of typical crashes, prices initally continue to increase at a time demand (transactions) fall markedly and then, after a period of stability, prices fall markedly while demand (volume transactions) increase rapidly. Question being ; Where are we now if this identifiable relationship holds as it always has in the UK market? Could be we are in the stability bit, maybe about to enter the falling bit if transactions are rising and regional price falls continue to filter in and increase some months later in the land registry. Transactions have been rising of late, albeit at/from a low level. Either way, the point is that I would not jump at a single batch of figures until the corresponding relationship to transactions-approvals-sales can be identified the few months later, the relationship is just not a straightforward supply-demand situation according the position in the cycle it occurs. At the peak of the market, rising transactions and approvals will likely be realised as increased prices but in the past, on the downswing of a property cycle, those rising transactions have been accompanied with price falls after a lag. Of course, it could all be different this time and we are entering a new paradigm. I guess it's down to your own indiviual reading of the market fundamentals of the uk housing market. Boomer

Hi, Yes, it's an important point, debt per-se is not a bad thing. It does seem to be a problem in the current climate and nature. It's about timing and playing the market, making acceptable risk-reward decisions at at the right time and point of the cycle for your own circumstances. Trying to make the right decision when to be an uber-bull, when to be a bear. I don't think there are any true perma-bears her from the posts I read.

Hi, There is a point there, for sure. There must be a large number of people in serious debt because we are hitting record levels of bankruptcies, mortgage arrears and approaching mortgage repocession levels last seen during the crash of the ninetees. We also have record outstanding personal debts. Someone has to be holding it. And recent reports have suggested that it is the 20-35 age group who are taking the brunt of it. The figures are there, you can't really dispute that it exists. All the banks to a tee have been raising their bad debt provisions over the last year. Why do you think? The deeper question. Can the economy bumble along in a slow growth, debt burdened state as it does indefinitely? That will not be much fun for anyone. Japan and the Netherlands are examples of this situation in the recent past. Many years of recession and technical depression (years of real and negative, wealth reduction have occured there). Something needs to appear on the horizon sharpish to pull the economy away from the current position. It is not viable from the standpoint that the debt burden will continue to increase for no other reason than the accumalation of interest repayment from this time on. Multiple debt default harms business confidence and international credibilty. More precisely, ask the question : Is the economy about to enter a non-debt period of growth in the near future? That usually means a large increase in personal saving, business investment and foreign inflows (export markets and foreign inward investment). this is the traditional model of recovery growth. Additional savings and inflows to banks get recycled to loans for business and wealth creation. In the UK, we have to clear a historically highest ever level of debt before actual saving can occur. Boomer

Hi, The economy is interdependent, a small ripple in one place can cause large waves in another. £1.2 trillion debt and it's not going away. That is the bottom line. And regarding percentages, it only takes decimal figure percentages to default to cause a property crash. i.e., in a property crash, you do not suddenly get 25% of people defaulting, the height of the last crash had infact a peak of less than 1% of mortgaged properties coming into repocession order out of all mortages outstanding in the economy. (Source : Council of mortgage lenders : http://www.york.ac.uk/res/ukhr/ukhr0405/ta...04%20053a-f.pdf Boomer

Or, like a parasite that feeds off the hosts and eventually kills it and itself in the process. Although the parasite usually goes on to lay dorment eggs or lavae to trap another, new, unsuspecting host. Lesson is ; Wash your hands after you shake an EA's hand. Post moderation ; Of course, may real estate professionals cannot be described as such and are normal, tax-paying individuals making their way in the world and providing a necessary service.

Hi, That is the trickier one because that is 'internal' market data for the lenders and estate agents until well after the sale is recorded in the registry. The BoE report also expanded beyond transactions to approvals also, since rising approvals in a falling market often eventually come through as price falls due to the influence of gazumping. Still, where there is a will there is a way, thinking caps on. As a point, did you notice that big song and dance the estate agnencies made the other week or so about the dishonourable 'gazumping' tactics of current buyers? Remember the mirth it bought us for a week here? Sooooo, why are they so concerned, to the point of going all over the media to deplore gazumping buyers if the market is exploding now? It wasn't exploding for several years in the early nineties, despite rising transactions, quite the opposite, there were massive price falls as the market adjusted to more realistic prices for the prevailing cost-affordability issues and economic conditions. Think also. Gazumping hits the profits of estate agencies in many ways, including the time and effort expent in securing a sale. For lenders likewise and more so in that they will wish to saddle as large a debt as they can get off you. Bigger debt = bigger profit. Eventually many EA's get to the point where they need revenue coming through the books again and may compete against eachother by offering a quicker sale, albeit at a lower price than the rival. Aren't we seeing many already advising clients to drop the price or value 'realisitcally' to ensure a sale? It works both ways. When you are stuck in an unsold home with new adventures to pursue but cannot, that is just as frustarting as a someone wishing to buy but unable. Boomer

Hi, It's all there, printed in black and white in the land registry. I posted here a while back as well an article from a few years back, by the BoE - I think it's still on their site in the archives - all about Gazundering and the role of downward pressure excerted by buyers in a falling market that also confirmed nicely that rising transactions are common in a falling market and often signal breakdowns to a new, lower price level, in much the same way as guzumping drives a rising market.

Hi, Add to that interest-only mortgages. For those unfamiliar with the cut throat nature of UK personal finance and financial advisors or things from the past like endownment mortgages, dot.com trusts, pension surrenders, etc., I am nailed on certain those are ticking timebombs chained to the ankles of some owner-occupiers.