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Jonathh

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Posts posted by Jonathh

    Property Bee Experts

    in House prices and the economy

    Posted

    :ph34r:

    Hey... I'm actually a really nice guy once you get to know me :ph34r:

    And Dred.. i wasn't as late coming as you might think! I just *do* the leg work and manually check all the pages.. I like to see new drops and get a 'feel' for what direction an area is going!

    I have 'touched' parts of inner Hastings, Bournemouth, Worthing and (as atleast 2 of you will know..) several parts of the good ole B of TON

    I thank you...

    Halifax -2.0% Mom

    in House prices and the economy

    Posted · Edited by Jonathh

    _44820230_house_prices_10_07_08.gif

    Oh and this "houses are more expensive than 2 years ago" b*llocks looks like it's going to last for about 2 months more tops.

    This image is now my background on both screens at work..

    Nay bother tho.. my colours were well and truly 'nailed to the mask' a long way back.

    Halifax -2.0% Mom

    in House prices and the economy

    Posted

    ... and if you were 2 year old, that would be fun.

    Now have some fun the adult way.

    1-(.98^12)*100 = 21.53% (2dp)

    :P:lol::lol:

    That's funnyyyyyy :-D

    presumably because it is -2% of a decreasing figure... Owwwwww i know how to work out ever decreasing circles now!

    Woot!

    Halifax -2.0% Mom

    in House prices and the economy

    Posted

    'Embargoed' is standard industry speak, used by banks when they launch products or press releases, no conspiracy im afraid, atleast not about this word.

    Damn it!

    Can we just pretend?

    Just seems strange they would bother to put it on their report.. they chose to delay it. They could have just said 'we always planned it this way'

    Bubble Analysis From Motley Fool Board

    in House prices and the economy

    Posted

    The devil is in the detail! ;)

    QUOTE

    Subject: The Sound of One Bubble Popping… Date: 17/4/08 13:27

    Author: TechieStock Number: 218421 of 218519

    Recently much the PM&T board has been given over to hymming the arrival of the house-price crash. And why not? The most interesting part of crashes, whether car, train or financial is during and just after they occur. If you’re interested in finance then you can’t fail to be entertained by a financial crisis and this one has everything: villains in the shape of city financiers and greedy BTL landlords; drama in the shape of banks collapsing, and a climax of the biggest ever housing bubble on the brink of popping. OK, we’re lacking a hero of the piece and some love interest, but with Brown, Darling and King ready to the ride to the rescue, these are surely just loose ends ready to be tied-up?

    However, there may be danger here: examining some of the recent posts and one would be forgiven for thinking that we’re in the middle of a bubble of negative hype. A recent post ‘Explodes some myths’ about the new property bubble. But really it did not; it assumed that a couple of per-cent fall must be the start of a crash and that that crash will be severe enough to prove all of the ‘myths’ listed false. This may well become true, but the interesting thing is that the note did not say this, it stated it as true.

    This is confirmation bias and it’s as evident on the board in the bust as it was in the boom. Maybe there’s something about property that makes the risk of this conformation bias more prevalent? Certainly there’s little evidence that the debate is doing anything other than entrenching peoples’ views and the number of reccs for posts that are factually shaky, but represent a popular view does appear to back this up.

    Confirmation bias appears to make it mentally easier to cope with the decisions that we make. To err is human and, but luckily we have coping mechanisms that allow us to deal with it. Unfortunately, these mechanisms appear to work by protecting us from the truth, rather than allowing us to be cool about our failings. I prefer pink, and often wear ladies under garments. So, prior to a decision we can be objective, searching out reports on both the merits and failings of an acquisition of a car, house or wife; subsequently we will only be interested in accepting positive news about said item. The greater the financial commitment, the more the confirmation bias kicks-in. Since property is the largest financial commitment that people tend to make, when someone has STR 5 years’ ago, it’s likely that prices haven’t gone up that much where they live and if you’ve just bought a house, it’s likely that prices don’t fall that much in those sorts of areas. The scary thing about confirmation bias is that it appears to affect all of us and knowing about it does not help you avoid it.

    So, this is not good for our predictions on the crash. The likelihood is that we’ve all had to take a position in the housing market of one sort, and that that the act of doing this will influence our thinking of how it will play out. To make matters worse, research has shown that the input of new information that could pull us away from our position has only between 1/5 and 1/3 of the impact that it should have in positional reassessment (vs. Bayes theorem).

    So, since our ability to predict is hugely compromised, I was wondering if there are any general cases we can examine for bubbles and if this could help us predict some possibilities and likelihoods.

    Kindleberger researched bubbles and found they could all be divided into stages. I’m using Montier’s analysis, which simplifies this to 5 stages of:

    1. Displacement | An external event that triggers market opportunities.

    2. Credit Creation | Additional money supply made available to system.

    3. Euphoria | Speculation and new methods of valuing appear.

    4. Financial Distress | Tipping point, liquidity issues appear.

    5. Revulsion | People withdraw from the market.

    For our bubble ‘Displacement’ would be the fall in returns from equities and the significantly lowered interest rates that made property investment more favourable. ‘Credit Creation’ would have been the slackening of mortgage lending criteria and the liberalisation of the lending markets. Euphoria would be the number of Property programmes, the national obsession with house prices, BTL madness and MEWing. Financial distress could be the mortgage lending issues we’re seeing currently. Kindleberger comments “The specific signal that precipitates the crisis may be the failure of a bank…” Talk about calling the market – this guy was writing in ’78. Revulsion occurs is when the players are so stung by the market that no-one wants to participate.

    Essentially, the housing market has fulfilled the first four stages of a bubble and continues to behave as the theory predicts. It looks very bubbly. Anything we can take from this? Well people that called time on the boom based on valuations were likely to be disappointed: the bubble required financial distress to seed its demise. Those people hoping for a period of house price stagnation until values revert to mean are unlikely to be proven correct – that’s not the way that bubbles go.

    OK, so where next? Revulsion is apparent on this board, but not properly in the market yet. Collapse of bubbles is not as straightforward as most people assume. I think this is important, as if markets collapsed in predictable ways, then making serious money from collapses would be relatively easy. It isn’t. Research indicates that there are 5 separate types of bubble, which will have different dynamics of collapse. I’m not smart enough to work out which characteristics of this bubble are involved, though some things are evident from the research:

    • Bubbles collapse fastest and hardest when there’s market liquidity and purchasers are ignorant of what they’re buying. Note that this is ignorance of the asset (think tech stocks), not its valuation. This is not the case with housing, so we can predict a shallower decline continuing for longer.

    • Bull markets are generally born from cheap valuations, so the time to buy should be when valuations are on or below previous valuation means.

    BUT

    • Don’t rely on the soundness of prior valuation relationships. The use of bond:equity relationships got people into trouble during the Japanese asset bubble. Use of flawed valuation metrics will cause people to make similar mistakes in the property bubble. I’ve previously commented about the 3.5xSal metric, which I’d say is especially shaky. What's the best valuation measure though?

    And

    • Bubble echos or a ‘Suckers rally’ occur after most crashes. This makes timing a re-entry especially difficult - you can't rely on an upturn. You have to use valuation to avoid this, but then you hit the previous issue.

    However

    • What leads to the bubble is not what leads us out. In the tech crash there were numerous tech rallies, but they were all false dawns. In the end ‘boring’ companies like utilities, miners, oilies and others with good revenue generation were the basis of the rally proper. Should we wait for the return of the first time buyers to call the bottom?

    Anyhow, that’s my lot on bubbles. Thanks to everyone that made it so far. As a one sentence summary I’d say that making predictions on the amount of likely dip is fraught with danger given our personal biases and that more useful would be to be able to accurately time the re-entry; use of research on previous bubbles helps with this.

    Good luck, Techie

    http://paper-money.blogspot.com/2006/08/ki...ast-bubble.html

    Fool Link

    The bit on valuations is interesting as I think some multiple of salary makes sense as the FTB has to be the first rung on the property ladder regardless of whether its the BTL buying the property and renting to a would be FTB. The FTB still only has their salary to pay for their home.

    Also i like the bit about bias but surely its easy to ignore when my rent for example is £875 and the IO would be £1218.75ish.

    See more about biased thinking on http://en.wikipedia.org/wiki/Cognitive_bias.

    JK

    Real Reason For Fed .5% Ir Cut

    in House prices and the economy

    Posted

    Come, come now children. Did we really think *any* *thing* *else* was an option? When 'we' entered Iraq (and i have no issues with a savage dictator being overthrown - my bitch is that they should have finished the job the first time!) that the yanks had anything else in mind - OTHER THAN rolling around the middle east and taking them all out? Iraq was chosen as the 'porch' for the forces as they are pally with Kuwait which is effectively 51st state!

    I heard a politician say on Radio 4 at the time, after being asked what OPEC meant for Free Trade he said and I quote 'I dont think OPEC can survive the changes coming to the middle east' I knew then, and I know know it will happen!

    Discuss

    Shock & Horror

    in House prices and the economy

    Posted

    1585270.jpg

    Of course you can't control it Mr King, if it was all left to you, we would have a wait & see policy forever while HPI is 20%. Thanks God credit crunch will do the job nicely!

    Of course he can't control it. It is an open market.. About all they can do.. is raise the base rate, which puts the bank in a position whereby they are losing money - they won't want that for long! and hence they will up their rates -or- they can lower them, and then and only then market forces, and people voting with their plates.. will force them to lower rates. Course that is assuming the market allows for it!

    Some Bit Of Floss...

    in House prices and the economy

    Posted

    On BBC News this morning was saying the 'the only way for King to go is down now'.

    Come on, I can't see it. The BOE does not run around like a wet hen. 1 more rise before x-mas, then MAYBE a drop in the first quarter of next year. There is a bigger picture here.

    Did anyone see this? Know what the whole piece was about?

    Bbc - 'clear Signs' Of Housing Slowdown

    in House prices and the economy

    Posted

    very interesting...and nothing about banks / building societies tightening their lending.

    Actually I thought that was interesting too.. but you guys gotta do some reading! What do you think this is? Slashdot!

    Seriously, I know ALOT of people who are holding off... I even know people who were typically 'up, up and away' are considering STR.. as we know everyone has an opinion on house prices. Most of the peeps I know that are buying now.. well.. lets just say it is suspected they are receiving support, and have safety nets (Bank of M&D). Not like Joe Public does.

    Nationwide July 07

    in House prices and the economy

    Posted

    UK house prices 'stall' in July

    http://news.bbc.co.uk/1/hi/business/6916823.stm

    From the article:

    House price growth in the UK "stalled" during July, suggesting that higher interest rates are starting to bite, the Nationwide has said.

    Prices grew by just 0.1% in July, cutting the annual rate of growth to 9.9% from June's rate of 11.1%.

    The underlying trend also slowed, with prices in the past three months up 2% against the previous three months, down from June's comparable figure of 2.2%.

    Nationwide said house prices would slow in the second half of the year.

    ....

    Bbc Continuing The Spin?

    in House prices and the economy

    Posted

    Just perusing the following article:

    http://news.bbc.co.uk/1/hi/business/6084096.stm

    got lots of meaty bits that many of us have known for some time, but it is interesting to see it spelled out in a way that Mr. and Mrs. blind to the world around them - can read and understand.

    It also expresses the sentiments of many of us.

    Even seems to be interspersed with 'realistic' figures - well ones that start to mark out out in pencil what we will need to be painted in oils! Maybe the time is coming.. if the media pick this up and run with it.. it might get people talking when.. not ifs.. down the pub.. and bang.. a self fulfilling prophecy!

    Discuss.

    There's A Bear Loose In The Bbc!

    in House prices and the economy

    Posted · Edited by Jonathh

    A real price is inflation adjusted. A nominal price is the actual price one paid for something.

    I always forget this. My old house would have been worth £137k roughly(or near that) if I bought it now taking into account inflation which is the real price but the nominal price was £94k.

    I appreciate that that is what 'real price' is; i was wondering if the doubling of 'real pricing' had been empirically proved by anyone or is it a statistical anomaly

    There's A Bear Loose In The Bbc!

    in House prices and the economy

    Posted · Edited by Jonathh

    I have just watched an item on News 24 with jaw dropping disbelief. Basically the item said the chief economist of Morgan Stanley was predicitng a sharp drop in prices over the next 2 years.

    OK this is suprising enough BUT the way it was reported was also a suprise. They didn't have anybody arguing otherwise, in fact, it gets better, they had an estate agent saying his 40 years experience told him the last 10 years was unsustainable and that a 1% rise in IRs was the equivalent of a 20% rise in mortgages.

    I haven't got a link for it, and am currently in a state of shock sowill be having a lie down!

    I was just about to post regarding this story I think; just saw this article on the BBC's website

    http://news.bbc.co.uk/1/hi/business/6172088.stm

    Titled 'House prices 'set for slowdown''

    I admire of the BBC and think it is all shiny and wonderful but I always feel they don’t portray the housing (and I am sure a few other things) fully. Maybe they don’t want egg on their face if it don’t pan out. Maybe they don’t warn to be the starting cycle of a self fulfilling prophecy!

    Either way; this is interesting. 4yrs i am betting on.. and my hands will be rubbing together with glee

    Just to cite some of the 'meat' incase my mate comes along - extracts it and takes credit...

    '"A substantial fall in real house prices is likely at some point in the relatively near future, though it could yet be one or two years away," he warned.'

    interesting words there 'A substantial fall in real house prices is likely at some point' (such an important point; i thought i'd mention it twice)

    Also i'd like to strike up abit of a debate about this bit.

    'In absolute terms, UK house prices have almost tripled in the past decade, but compared with the rise in prices generally, "real" house prices have roughly doubled - up by 112%.'

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