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Second Time Around

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    west midlands
  1. I was lurking on the site in 2005 - my recollection is that some posters then were basing their predictions on Fred Harrison's work based on the 18 year property cycle - so there were some predictions made at that time of a "top" being reached in 2007 or 2008. In that sense I think HPC foresaw and predicted correctly that the housepricemania could not continue indefinitely. However, I am in complete agreement with you that many posters, including me, failed to factor in the resolve and commitment of government to prevent the banks failing. However, that doesn't mean that the market won't win
  2. Completely agree. Mrs STA and I have been saving for a bigger home in retirement. We have seen price falls in the North West (which is where we intend to retire to) of 15-20% from peak in some areas - so losses to the savings pot via inflation are minor by comparison. As far as the OP is concerned I believe that house prices will eventually go down about 60-70% from peak prices in real terms. Although warned by wiser posters on this forum about the determination of governments to avoid deflation I had to retract my earlier belief in seeing nominal falls at this level three years ago when the
  3. She has been appearing on TV (the Beeb particularly) for quite a long time. I recall her appearing on a Newsnight "Special" looking at the then overheated housing market in May 2007. She was of the view at that time (four months from the run on Northern Rock) that the fundamentals of the housing market were sound. It seems she has now been invited back to espouse her view of the world again without the caveat that her track record is not a flawless one.
  4. One of the things that was different with this crash was that the provinces didn't experience price drops in the fallout of a London/SE bust as happened in previous crashes. This time it was the provinces that saw the falls in activity and impacted on the average price falls nationally - I experienced that in the West Midlands in particular. London average prices have held up due to the foreign buyers for quality estate there. Properties in the North West (which is where Mrs STA ultimately wish to retire) actually rose for about a year after 2007 before falling back - which they continue to do
  5. I agree with you mfp123. Von Mises and the Austrian School provide a valuable insight and analysis here. The mal-investment taking place during the time of easy credit is identified and destroyed in the aftermath ie the "creative destruction" (as Schumpeter called it) of a recession/depression. Government intervention to prevent recession and depression has the effect of "locking in" the mal-investment and as you note prevents market signals from working properly. The beneficiaries are firstly those acquiring assets cheaply from the imprudent and reckless, and secondly those who were prudent a
  6. Your post is referring to the American situation, but in my view the dynamics of the property market have now changed - both in America and UK. The only way for prices to go is down in real terms over the next few years. If you follow the classic property cycle (read Fred Harrison) it is 9 years to the bottom after a peak - so 2016 is the likely time to see prices reconciled in terms of median income ratios and rental yields vs house prices. However government intervention with low interest rates and QE has thrown a bit of mud into the pond so this might have the effect of extending the cycle
  7. A much happier ending than disappearing in the flat above the burning carpet store in Croydon.............?
  8. I agree with you Mr Pin. I don't see the top end performing particularly well in the North West and Midlands - a lot of properties are still on Rightmove from 2009. This year some of the new properties in the c£1m area seem to be more competitively priced. I can only put the enthusiasm to pay so much at the top end down to old habits dying hard amongst those who still believe that you can't lose with bricks and mortar and are ignorant of the fragility of the present market. You have play the long game here - along with other countries which have "guaranteed" their banks, the UK has the poten
  9. I think this is on the right lines and deep down I hope that you are right BUT the strategic thinking is, as you say, to play for time in the hope that the banks can take a hit without the disaster a 2007 default would have wrought on the UK system and wider economy. However, it might be premature to think we are much better off than four years ago and we might still have another round of QE just to cushion the banks again: see quote below from BoE website: "At its meeting in February 2010, the Committee voted to maintain the stock of asset purchases at £200 billion but the Committee will co
  10. Another thread has picked up on the movement of investors' funds to the US and UK as a consequence of the turmoil in the Euro zone. As you say this downgrade might force the US to raise interests ie not wishing to lose out to the UK if it appears to be a lower risk. I can't see the UK avoiding much greater scrutiny over the next couple of months - attention has been diverted from its even more dubious position owing to the US and PIIGS being in the media spotlight - this might prove to be a turning point for UK interest rates. I can't see the UK able to compete for investors' funds with the
  11. Similar feeling to the OP - that there's a bigger picture we as yet cannot get sight of. But a few of us - not yet the wider population - can't help but get drawn in. Perhaps for the many we could re-issue this poster with a new title "Daddy. What did you do during the Great de-Leveraging?"
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