Flat Bear

I am going to mark on my planner next year the dates of these "unexpected" shocks. the BOE only have 8 meetings a year now I believe which means they don't have to express their shock so often.

You don't really believe this yourself why try and persuade others? We have, and will be getting, very unhealthy wage growth (wage increases without corresponding productivity increases) in an extremely inflationary environment. The number of job vacancies has started to fall and unemployment is rising at a time when many types of vacancies remain unfilled. People are demanding more wages out of necessity. We are only just entering the long forecast depression. Productivity will continue to fall as wages and inflation surge. We have had relatively low energy cost for quite a while now but due to a lack of long term investment and growing global demands we will see marked increases in energy costs over the next decade. Zero carbon does not help the situation. Global energy requirement is principally made up from coal (68%) and coal has become increasing more expensive. This increase in power will push up the price of imported goods from the east. There is absolutely nothing on the horizon that will help drop prices thus the inflation rate in the UK. Inflation will have to be tackled the same way it has always had to be tackled and a prolonged period of stagflation will falling asset prices as we suffer the consequences of economic policy over the last 20 years. Very high interest rates with very limited money supply (credit crunch) This combination will see plummeting asset prices with sentiment doing a 180. By the spring of 2024 even the most optomistic bulls, such as yourself, will see the reality of it all. All this comes down to the economic realities we are in. IF the magic money tree is brought back out on steriods and we see a new round of QE stimulous together with a return to ZIRP which somehow everybody accepts and the pound keeps its value then we will see house prices go to the moon. BUT which of us is seeing the real economic reality we are currently in?

Yes. There is still a lot of money out there sloshing around and it will still be some time before many realize they really can't afford it. People are spending regardless of the price. I think you are spot on with 6% being the psychological base rate that will see sentiment change.

House price inflation. CPI inflation. They are both inflation right? As I have been discussing with others who I would say are bulls in bears clothing (they would disagree) QE which in turn created HPI is latent general inflation that will at some point will transfer to the CPI figures. This can take a very long time. In this case it has taken over 15 years. The same can be said in reverse. With very high general inflation at some point this will push the price of houses up again this can take a long time but eventually prices will stabalize. The difficult bit is working out when prices have reached their equalibrium and we can see the real price rises or falls not just the nominal.

What has changed? What was happening in 2014 and how does that compare to what will be happening next year? In 2014 Interest rates were already on the down and the projection was down to zero and beyond? Money was being pumped into the system and banks had a deluge of debt they wanted to market against very safe assets. Holding cash cost you money and was frowned apon. Money to buy property was not only getting very cheap but it was becoming increasingly available at higher multiples for everyone. It was becoming the norm to go into massive debt to own just a modest home. The only way is up right? In 2024 Interest rates are on their way up. Despite all the cries from borrowers interest rates continue up. At the same time the amount of money available is shrinking and loan criteria tightens up. All through the period 2022 to 2024 it had been thought rates would pivot and it would all "go back to normal" but in 2024 the realization that "the new normal" was not the ZIRP of the previous 20 years which was in fact a very abnormal period in world economic history. On top of this a marked slow down and recession forces the new phenomenon of the forced seller. The only way is down right? The plateau of prices will continue You can just about get away with saying prices have plateaued. I would suggest we will see modest nominal year on year falls of around 5% at year end which will be a definate nominal fall albeit small. We will not see the BOE base rate get to 6% until the end of the year possibly at the February 1st meeting 2024. This I believe will be when we see nominal falls in house prices accelerate. 1% per month cruise speed.

@StewyInflation is a very strange phenomenon. With the global economy being more entwined and with so many currencies an inflationary global situation with the very indebted and devalued fiat currencies of the west will take a lot of knocks before faith is eventually lost. Some currencies will fare better than others, which is becoming clearer. The USD will strengthen against the GBP and the EURO both of which will continue to become under increased pressure over the coming years and both regions will see double digit inflation at the same time as a shrinking economy (stagflation) for a long time. House price falls will only be one consequence of this. Inflation has more to do with "expectations" than any arbitary fall in energy prices due to some global factor or other. What has been shown in all other previous periods of high inflation is the volitility of prices. The 1970s saw spikes in the Oil price and the 1980s saw spikes in certain commodities. This will happen again and already has to an extent. Some items actually come down in price over long periods even during periods of high inflation. It is not possible to really measure inflation by any measurement of price changes in a group of products or services. This only shows you the change in price of that group of products. "Productivity" is the only real way for a nation to become richer at the same time as keeping inflation at bay. "Productivity" in this sense can also mean simply purchasing products for lower prices domestically or from abroad. (knock on affect) A more accurate way of measuring inflation is by measuring pay rates. More accurately how much in currency terms people value their time. We are seeing income growth of around 10% pa which still has upward pressure despite growing unemployment figures. The government are trying to keep this inflation down to below 8.5% (pensions, benifits etc). Again, despite these increases in wages there is still a shrinking overall labour market as people value their time more than the offered wages. The government are set to squeeze the population. By freezing allowances etc they believe they can increase taxation and think this will somehow bring down inflation. This is total b##llocks and all it will do is stiffle growth and incentive which will make the oncoming recession longer and deeper than it should have been. Inflation is already here and it just does not just go away. Everything the government and the BOE have been doing over the past 15 years and especially over the last 3 years has been extremely inflationary. In the very short term could inflation as measured by CPI fall to 5%? This is possible due to global price volitility but this would be short lived as we see inflation take off in 2024/25 We are in a very bad place with the credibility of our currency at risk. I know you disagree with this as you see our currency as extremely strong and people willing to have faith in this fiat currency and thus a sudden deflationary period. You will need to tell me why people will do this. Why are there still groups on strike? This would not make sense in your senario.

What has changed? Firstly check out the accuracy of the BOE in previous forcasts. They have been wrong every single time. Do you believe they will be right this time? Why? In their own actions they realize we can not get back to 2% next year but they are still saying we will???? This chart shows the hopium. Group think is still the order of the day.

Hmmmm Anti birth controller. Suppose there has to be someone like that. With your logic london would be overrun with rats and other vermin a long long time ago. What right have we to stop them breeding? That's why there are teenage mums poping out sprogs at our expense. They used to call it family planning for a reason I'm just a control freak saying actions have cosequences, or should have. Having come across a number of your posts on various topics in the past I already knew you are a few slices short of a loaf. Why do I answer??????

Thank you for your reply. A lot more thoughtful than normal I would say. What has changed? This is a great question and I will answer this as well as I can later. We've still got 100,000s arriving annually who need housing. The Bank of Boomer is still strong. These are two very good reasons why prices have not collapsed and why there is still a lot of upward pressure. I do not disagree with you here. There is still a lot of extra money in the system albeit at higher interest rates which will continue to feed inflation. You are also correct that the need for housing is greater than it has ever been before which will put a floor on falling prices.Thank you for the respect of putting a proper argument for upward pressure on house prices. We could say we are at a maximum affordability situation. The only downward pressure is when people can not afford to buy at the current rate. I think we have been in this situation for the last 20 years. Sentiment will play a part but I agree it will not be as important than many imagine. The plateau of prices will continue until interest rates collapse again, then we'll see another wave of buying from the new money millennials with Bank of Boomer inheritance/gifts. This is where you go wrong making assumptions without any logic at all. Ask yourself why? What is different this time? What has changed? Am I just hoping these things will happen? Because I want these things to happen? is this clouding my judgement? Am I emotionally tied to the notion of ever ending HPI?

The falling population before 2100 is pretty much “baked in” because the children that are supposed to be producing babies in 30 years time to make this happen have just simply not been born. What sort of reasoning is this? Why do you know what children (people) who have not yet been born will do? Will they not do exactly as humans have done for millennia? Currently there are more children being born every minute than ever before and the rate of population increase is growing. WORLDOMETER WORLD POPULATION CLOCK. It has not gone backwards for a very long time. Blackdeath??

hmmmm From population matters May 2023. Check other sources as well. Have you got any thoughts??? Could the planet hold more in the very long term???? WHAT IS THE “IDEAL” POPULATION SIZE? The question of what population size is environmentally sustainable has been addressed multiple times. While estimates have ranged from as low as 100 million, the most frequently occurring figure is 2-3 billion. Others have taken a different approach and posed the question of whether a good life could be provided to all within planetary boundaries. They show that while only the basic needs of 7 billion could be met currently, by implementing significant changes in social and technical provisioning systems and shifting consumption towards sufficiency, a good life for the same number of people could be sustained. All previous interrogations of sustainable population have treated population itself as a factor determined independently of other social and environmental dynamics and have largely relied on the population projections generated by the United Nations Population Division (UNPD).

despite talk of sudden falling fertility, a possible global pandemic, a major war, getting hit by an asteroid etc., the global population has been very steady and there is no reason at all for this not to continue this same projectory. Every prediction since the 1950s has underestimated growth. The information tells us a billion people are added every 13 years which is starting to increase the rate of growth. The fall in fertility in the UK natives which has fallen is more than easily made up from immigration and children of first imigrant families. In fact the population of the UK, especially England, will outstrip nearly every other country over the next 10 years. Official prediction figures that have been wrong every time so far has the global population at just 11.2 billion by 2100 with an upside of 16 billion and a possibility of a peak before this and a possibility of actually declining before 2100? Without any outside force there will not be a peak or a stop in growth, that is just wishfull thinking. However, the odds are we will see some event or serious of events that will see a fall in the global population. The more popular senarios include 1. a global pandemic.is this really plausable? Could you imagine some sort of killer virus killing the vast majority of human life? This may be the best outcome with the least pain 2. A global nucear war taking the world back to the stone age and making most of the planet uninhabitable for 100s of years due to radiation? again a reasonably good outcome. 3. Running out of basic human needs such as food and water. This would probably effect certain parts of the planet more than others but as resources dry up people fight for what remains. This would be one of the worse senarios as it could go on for a very long time, possibly centuries, with much suffering

When my father was born there was less than 2 billion people on the planet (1922). It was only just over 100 years earlier the world population got to the 1 billion milestone.When my father died there was just under 7 billion on the planet (2010). 3 and a half times the population when he was born. When I was born there was less than 3 billion people on the plate (1958). There is now 8.1 billion people, plus or minus one or two, on the way to 3 times the number when I was born. As time goes on and the population rises each individual has demanded more and more resources, so far the planet has provided BUT there has to be a time in the not too distant future when something has to give. Will the planet start warming up? (I don't believe this is an issue yet dispite some predictions) Will it suddenly cool down? (lots of reason why this might happen) Will there be enough food for at least some of us? Will the levels of co2 go down thus starving the plants which in turn stops producing oxygen? There are so, so many things that will be a result we just don't know yet. Question such as how many people can the world actually support even for a short time frame? Good news is for the younger people is we are likely to see this point reach sometime in not too distant future. I personally think we could see 10 billion but there on up is anybodies guess. We will see 10 billion in around 20 years, maybe just over, so I should be alive to see this milestone. According to research how many people can the planet sustain long term? The answer seems to be a consensus of 3 billion, with the "ideal" population being as low as 100 million up to 3 billion. The amount of resources each individual demands is also growing so there will be shortages of resources going forward and future wars will be in the pursuit of resources. As always the strongest survive as they must. Forget about saving the planet, save yourself.

THIS THREAD WAS STARTED OVER 16 YEARS AGO BUT IT IS AS TRUE TODAY AS IT EVER WAS. Bottom line is there is always a slow down in HPI before a recession and there is always a recession that accompanies a fall in house prices. Depending on the depth of recession house prices will fall. There is a correlation every single time. We have/will see nominal house price falls of around 5% by year end and this will indication we will go into recession. Inflation has to be taken into account as it distorts everything and everything is in real terms. This is why it is best not to give advice on your own assumptions alone like this @29929BlackTuesday idiot who shouts advice at first time buyers to not buy a house now (2007) as they will come down, no question about it. At the same time as berating me for getting posters to look at historic data and making a spelling mistake. Maybe it would have been better if he actually read and took on board what I was saying or even some of what Andrew Farlow had been saying even if he disagreed with some or all of it. If they timed it exactly right and bought in 2009 they may have saved 10% but was this enough to put their lives on hold? For what it's worth my advice today for FTB's is to not be too much in a rush and make absolutely sure they can afford the higher mortgage payments for a prolonged period. I would not advise not buying because people need to get on with their lives and no one can predict exactly what will happen to the economy or their lives. It is true that nobody (possibly a select few in the know) could have predicted QE and ZIRP but there are always things that come out of left field.

PLEASE NOTE THIS THREAD WAS STARTED A DECADE AGO @Stewy This was a thread I started nearly a decade ago now and as you can see from the content I was predicting a long period of HPI in the UK. I did not want this to happen as I thought it was a very bad thing for the people of this country and would destroy the lives of many people. BUT, I could not ignore the facts and they told me we would see HPI whether I liked it or not. Today I see a situation where will have all the ingredients for a long and protacted period of house price deflation. I admit to thinking this would be a good thing and necessary, BUT I truely believe I am looking at, and baseing my judgment on the facts alone. Like many of the bears back in early 2014 who were in denial you are in denial now. Their arguments were pure hopium and were based on gut feelings as you admit your reasoning is now. Wake up and smell the coffee and get out of the matrix. Use your brain and not your heart, please. If you have any real reasoning then I for one will listen but stop all the hopium s##t. If there is any particular reason you would like me to address for you I will oblige. Are you playing devil's advocate though?

How much has the property been improved over the last 3 years? How much was spent on it? There was nothing in the description to say recent extensive improvements or similar. It will be interesting to see what this does sell for if it eventually does. Tells me there are still a lot of people just trying it on. It will be the agents who will lose out as their "professionalism" comes into question by marketing unrealistic expectations. Yes, please keep us informed as others have already asked for.

I think you are quite accurate in your thought process here and you are asking the right questions. Wouldn't it be good if Bailey could do the same? This is exactly the truth. It could well be possible for the fall in house prices to mirror the rise in general consumer inflation. If it mirrors to a zero factor then we could see completely flat house prices with higher general inflation. If we see a factor greater than zero we will see falls in house prices. The bigger the factor the bigger the falls. In @Stewy world the factor could be less than zero, which it has been for many many years and HPI will be higher than general inflation. What is the current factor? Anything is possible. The variables being: UK base rate, consumer inflation rate especially core inflation including wages, the amount of available credit and the actual need for housing. Basically supply and demand, as always.

The thing is Bailey does not believe that inflation in asset prices can transfer to general inflation. THE CANTILLION EFFECT if you like. I have had a discusion with @Timm on this Cantillion effect on another thread. Timm is very sceptical and does not believe it either. Timm does not pretend to be a top economist but Bailey does and gets over half a million a year, not counting bonus, to boot. Listen to any of his many interviews/statements, non of them make any sense and at the end he evades the question. Typical answers "well it may do this or it may do that, we just don't know" uses this quite often. He could bore the spots off a leopard and has a degree in waffling I believe Interesting on his take a few year ago that he will keep negative interest rates in the arsenal and they will use it when needed "and they will be needed at some point" with a little chuckle. Unsure about @Stewy I think he may well be winding you up and is playing devil's advocate. On the other hand he could be a total nut case. I suggest that he does not really believe what he posts in any event. Maybe he is just very frightened?

As a number of us have been saying and realised over 2 years ago Bailey has an emotional attachment to the "new phenonomen" of ultra low interest rates forever. I will dig up one of his speeches where he scoffs at the idea of interest rates going above 3.5% ever again. Somehow or other he has come to believe his own retoric. He made an attempt several months ago where he tried to take on the market and the pound went into freefall along with the Euro which ended up below parity for a short period. I just knew he had not learnt his lesson although I think the ECB have had a shock and will do what it takes. After this ultra dovish speech I would expect the pound to become into increasing pressure against the dollar and euro and most other currencies with the exception of the ruble. He will actually make it worse for UK interest rates which will have to go even higher for even longer. In the end he will have to raise whether he likes it or not. He is making this stance now as he realises this is a pivatal point and when we see base rates get to and exceed that 6% mark the inevitable asset price crash along with a nasty recession taking place. The fact is he has no power, no power at all, in the face of this oncoming pressure. if he does try to tighten up the money supply, which he must anyway, it will make things even worse. Bailey has no credibility at all now and the only thing he can do is a @Stewy and we all know how that will turn out.

"The Russians are losing their war on Ukraine. They just don’t know it yet. This is where I am in total disagreement. The Russian's are losing the war in Ukraine (and outside). This is obvious to all. I do not believe there is anyone with reasonable inteligence who would think this was not the case. Does anyone know of anyone, without a vested interest, that truely believes Russia will prevail? Thought not.

This does seem to be the Ukrainian tactic now. I think it was always going to be the case that the Ukrainians were going to take the fight to within Russia itself, they have to. By now there would be thousands of special forces type troops, partisan groups and dedicated saboteurs within Russia itself ready for activation and instructions. This is the biggest country in the world extremely sparsely populated where all the troops are busy defending borders or engage in a special operation that has gone on longer than expected. They could not have really done anything much to date due to the political situation of using NATO weaponry inside, or targeting, within Russian borders. It seems with drone technology and by using surprise raids they will be causing increasingly high damage to not just the military and logistical capabilities of Russia but also hit the Russian economy which already is in a very bad place. Initially there will be plenty of rich military picking but I would suggest within a few more weeks we will see attacks on purely economic targets, administrative centres and more general infastructures such as oil depos, rail infastructure, factories etc etc etc. There is so much to choose from and I do not see how the Russians will be able to defend them all. Edited to add "Unexpected" fires and explodsions will suddenly break out in factories, oil depos, Road and rail centres etc etc. The Russians will deny it and they will gaslight with the most stupid of excuses even when it is really obvious. Mark my words.

Yes This is exactly the way it is. Anyone with any sense at all can see it. These trolls are terrible at their jobs and they are a laughing stock. DO NOT LET THEIR STUPIDITY GET TO YOU. Sorry to shout. See what I mean @Up the spout? This troll has got it exactly the wrong way round. Many of these trolls are already past the BARGAINING stage "ill do anything" as they realize nobody wants to negotiate with them on any terms short of them getting completely out of all Ukrainian territory and paying all reparations as well as bringing all those responsible for war crimes to be punished. They are in the DEPRESSION stage, "what's the point"? of continuing with this increasingly ridiculous Russian propaganda. They are just about to enter the ACCEPTANCE stage "We can't change it" time, where they realize Russia has finished and it is just a matter of what will become of this failed state. There is not much longer to go, trust me. The fog of war might have blinded them but the fog is lifting and everything is getting clearer albeit slowly so far. The Russian-Chinese border is the most heavily guarded border on the planet. How many of the elite Russian troops have been sent to Ukraine from there? Chinese/Russian relations are all but certain to deteriorate very soon.

A post I agree with. How much will end up being nominal and when will we see the bottom? Is a question many posters would like to know. You can not time the market and it is best not to try.

I think we need to be careful of wishful thinking. LOL

where were the Bond Vigilantes...? They were not needed because there was so much QE and there was an unwritten agreement that the banks would purchase the bonds on very good terms. When they did not, last year, the BOE bought the bonds directly. Different matter entirely when Bonds are introduced to the real market again. Am i right in presuming if the lender wrote off the losses that would destroy the lent into existence money ? Seems logical... This is where there are real world consequences of QE. The bad debt still needs to be balanced against the credit entry. The banks will be liable for the loss and this is where we could see bank collapses. The only question is how much debt will any particular bank have? They have been more strenuously stress tested this time I believe?