Confounded

Exactly my view. The house price indexes started to show house price increases before the housing market turned. It took 3-4months of propaganda before the market genuinely turned. It shows the authorities understood the power of the phenomenon of pushing string, low interest rates not being enough to push up the market on it's own. It was the same techniques used in the US to get the global stock market rising again. Now I am not saying either of the markets were not due a bounce at some point but the seed was sown by the authorities to reverse deflation and save the banks. My view on house prices has moderated also, still believe in real terms we will see a 60-70% decline but I am only looking for 20-30 from hear in nominal terms. The main thing that I got wrong is I underestimated the authorities success at manipulating the bond markets. I could see that the authorities would try and inflate away the debt but I thought the bond market would not allow it. I did not think it was possible for the central banks to buy such a large proportion of the issuance and actually drive rates down!

I sold my house using House Network back in spring 2007, when I had the estate agent came round they asked me how much I though it was worth and they agreed. Their opening quote was 3%, when they rang back to ask if we would go with them I said we would not because they were too expensive, they just left it at that! I got a good price around 2% below asking price. Some people rejected the house as too expensive so think I priced it OK but it is one of those things we will never know. The main thin is it cost me £500 pound all in and the service was excellent.

Totally agree and never suggested they were. Of the many I know who have bought in this bull trap have done so with substantial saving, participating in wealth destruction. Also those that bought in 2002 have had nearly 9 years to reduce their mortgage. The point is this is a mega bubble and the very fact so many have bought at bubble prices mean there will be a vast number of people who will fail to meet their obligations.

Peaching to the converted but I have continually argued that the area under the graph below is very important in this mega bubble and highlights exactly what your post describes. The number of people caught buying at bubble prices is huge this time, even the recent intervention for the election will have a further negative toll on the market. The last of my family and friends who were in a position to buy have just bought in September. I now know no one in a position to buy other than myself, everyone else is all in, many falling to the bull trap of the last year or two. Income to house price ratio

I nearly put that in my post, pretty technical language for Daily Mail, all good news for educating the masses.

Slump fears as mortgage lending falls to 8-month low of just £112m Read more: Here

I agree with you, freefall never happens in the porperty market, you would have to go back into the history files to find any evidence...

They probably will have to demolish 600,000 to counter act net migration London will experience when the last of the credit bubble money ebbs away.

These and many other graphs would beg to differer. Income to house price ratios are an essential guide to the health of the market. History shows it is very powerful guide as to when house prices have become over extended. Income to house price ratio

It is a long way before we know who has managed to get off the hook. It is know as the pushing string phenomenon. In a natural market even low interest rate and QE would not be enough to stimulate investor confidence. During this crisis the World governments (decided at the March 2009 G20) have taken action to actively pull the string as well as carry out loose fiscal policies. The US has intervened in their stock market, which the global markets tracks creating relative stability. The Chinese stock piled commodities to counter global deflation (with the help of the banks stock piling oil in container ships). The UK mainly focused on it's housing market stripping out forced sellers and using these VI indexes we are discussing today to ignite the far from dead UK property animal spirit. Ever wondered why the housing market showed little sign of recovery until at least 3 month of the VI indexes showing substantial rises? Once they have pulled the string far enough , combined with QE etc, the markets have built up up momentum of their own. Unfortunately the cleansing process has been prevented from running it's full course are we are essentially back to square one again. Even as a STRer waiting for better value and having to add another 2 years to my time frame this is a far better outcome than we were heading for had the markets been left to fully cleanse in a sharp 3 year crash. The bad news is we have decades now to work the imbalances out.

Why? QE and central banks rhetoric is designed to scare people with money to spend it counter economic cycle. The actual increasing of the monetary base will have little impact on on prices until velocity increases. Is there any more easy money to scare into the market? The last of my friends and family in a position to buy bought in September. I know no one who is sitting on a cash pile waiting to go into property.

America was scared of slipping into a recession/depression after the burst of the dotcom bubble and the 9/11 attacks. You may remember after the 9/11 attacks people both sides of the Atlantic being encourage to spend for victory. It has been an economic battle that has been thought since 2000. The policy reminds me of the Black Knight in the Holy Grail.

What you are forgetting is the vast majority of retail investors do not have an in depth understanding of how the markets work and have been schooled that sensible investors should use stop losses as a matter of discipline. You also have a large pool of investors that put real liquidity into the markets trading charts and momentum using the many trading platforms available. These are out and out speculators but their systems rely on the discipline of stop losses and technical indicators. Take these people out of the market and you are not left with a lot. For you to have the beliefs you do in the long term direction of the markets you need to also believe in the socioeconomic consequences of a broken market.

Yep when combined with the other countless layers of manipulation the market is too far gone. Central bankers PLEASE LET THE MARKETS CLEANSE THEMSELVES!

Numerous, but the main one for me is if you are a sober investor and someone who trades with sensible stop losses, when a stock goes bid-less for a microsecond the algorithms can crash a stock in seconds stopping you out and taking your money. This is a daily occurrence in the US markets at the moment. This has destroyed the market and investor confidence is ebbing away. HFT is just another piece in the slow death of the equity markets.

Correct, but in this market are you trading true equity? HFT trading, FED intervention, Naked Shorting (some banks stocks had more shorts placed on them than shares that have been issued), etc. Enron was a financial crisis and lesson that the financial markets never forgot, it has become the Western Blueprint.

Can you please explain to me what you believe the purpose of the stock market is?

Yes they a providing valuable liquidity but the problem is price discovery is being prevented. When combined with the below it could lead to immense volatility. They are playing with fire.

70% Of All Stock Market Trades Are Held for An Average of 11 SECONDS, What a great market... http://www.zerohedge.com/article/70-all-stock-market-trades-are-held-average-11-seconds The Fourteenth Banker writes today: In the stock market, program trading dominates volume. I heard recently that 70% of trade positions are held for an average of 11 seconds. He's correct. As the New York Times dealbook noted in May: These are short-term bets. Very short. The founder of Tradebot, in Kansas City, Mo., told students in 2008 that his firm typically held stocks for 11 seconds. Tradebot, one of the biggest high-frequency traders around, had not had a losing day in four years, he said Similarly, FT's Martin Wheatley pointed out last month: I know of one HFT firm operated out of the west coast of the US that boasts its average holding period for US equities is 11 seconds And market analyst Peter Cohan writes at AOL's Daily Finance: 70% of trading volume on the major exchanges is conducted by high-frequency traders who hold a stock for an average of 11 seconds. The fact that the vast majority of stock market trades are held for 11 seconds shows that the stock market is not a real market with real traders governed by the law of supply and demand, and with no real price discovery.

In the next few years I expect we will see net migration. With an ageing top heavy population I would not put too much hope in these predictions that keep being pumped out to reassure desperate home-owners of the crowded Island theory.

So we are shoehorning in 1.15 people into each new home built in this nadir "Net immigration to the UK (the surplus of people immigrating over people emigrating) in the year to September 2009 was 142,000. This compares with 160,000 in the year to September 2008"

Not quite!

Really, I thought good rates were only available to high LTV customers (in this case they have a negative LTV), if this is true then the bubble is most definitely on again.

My Dad just negotiate a tenants rent at a 1% yield on his land, does not seem that smart to buy now. Buying 60 years ago at the start of the credit bubble was a very smart move.

Not in the US, the banks are seizing properties that the owners had bought with cash!