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House Price Crash Forum


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Posts posted by Wad

  1. There must have been a lot of "tyre-kickers" out looking in January & February (me included) to see how EA & owners are valuing their properties.

    Its good to read that this increase activity just showed that the rest of the country thinks houses are still over valued as well.

    Agree with you there. I get the feeling that having heard the property market had come off the boil people who would like to move decided to see if they could buy at a sensible price. Nothing wrong with that. Lots of people went and registered with EAs as the New Year is the kind time of year people make plans. In other words the surge in new registration of buyers was a seasonal pickup. Frankly, I have no idea why EAs stil persist with this ridiculous practice of 'registering' interested buyers. The world has moved on - everyone jst looks at the internet sites now. I can scan thousands of properties and make decisiosns about whether or not to do a viewings without even picking up the phone to an EA.

    However, having been to look and perhaps made a few offers (mostly turned down) people have quite rightly walked away. What is more, the banks and building societies are also now in agreement with many potential buyers that "prices are still too high and need to fall further".

    EAs are registering people but it simply is not turning into sales. Its pure iction. Hence we see transaction volumes sliding back to the lows again and EA confidence falling. Sellers just have to accept lower offers and that is that.

  2. Just signed new lease a few weeks back. Locked in for the fourth year with no inflationary increase.

    I have seen no inflation in rents for the last few years in Oxfod and only slightly up from 2000 when I moved there.

    Plenty of aspirational rental asking prices that just stick and then fall back to the market level. Slight deflation over the last year or so.

  3. Have a friend leaving Dubai in a few weeks time. He is just in a company flat so no worries but he was telling me about all the cars abandoned at the airport as foreigners are just skipping the country and leaving tehir debts behind.

    He said he had heard Dubai are bringing in or have brought in a system where you have to produce a certificate to show you have no debts before a foreigner can leave the country now.

    Is this true? What happens to debtors in Dubai?

  4. This only works if you print all the money you need then no one has to actually needs work to produce the taxes that would otherwise be required to pay the £7 wages.

    In a world of quantitative easing this plan works perfectly. In effect, all that is happening is the workers are getting some of the QE money directly into their pockets if we increase publci sector wages. Indeed, I have long argued that if we really must have QE then just give the money directly to people so they can pay off their debts and spend what is left over.

  5. In previous crashes the ratio of house prices to 'male average full time earnings' typically bottomed out around 3.0

    On average over the long term the ratio is about 3.5.

    If this is true, and assuming male average full time wages do not rise in nominal terms if wage inflation is zero over the next few years then house prices have to fall by around 30% more to get back to a ratio of 3.0.

    I think that would actually represent slight undershoot in house prices and anyone buying at that point would likley be getting a good deal.

  6. Quantitative Easing is in part designed to ensure that long interest rates in the UK do not rise. The BoE will just buy Gilts to force long rates down. There is no reason why a Glt auction should fail if the BoE can just buy up the entire auction.

    Indeed, it is quite possible that the BoE may squeeze the Gilt market to shake out speculative short positions by just starving the market of new issues by printing money.

    EDIT: The authorities do not care about inflation for the moment and have the power to make sure they get bond auctions away regardles of the circumstances. Taxpayers will pay later but the politicians will be long gone by then.

  7. Talking to a metal stockholder last week.

    They buy sheet steel, copper tubing, aluminum extrusions from smelters, rolling mills, etc and and sell it on to fabricators and engineering companies. Very very low margin business but she said sales were up 10% on this time last year.

    However, she thought the reason their sales were up was that many of their customers had been refused credit by other potential suppliers so they were coming to them. Her firm was looking very carefully at credit risk as they knew a lot of engineering firms that are their customers were on the edge.

    I am wondering how many building sub contractors wll actually get paid for the work they are doing now.

  8. I am going to take a complete flyer on this but try this for a scenario.

    HSBC are raising money via rights issue and then offer to buy the retail part of HBOS (i.e the old Halifax), Lloyds walks away from the deal and the Govt takes the BOS part into public ownership and merges it with RBS.

    As I understand it, Lloyds and HBOS have not actually been merged as businesses but are still being run as separate entities.

    The Govt and other shareholders will accept and magically the whole problem goes away.

    Just a thought.

  9. America is a long way from being a free market.

    There are a large number of restrictions and protectionist measures at State and National level.

    For many years my wife worked in the alcohol beverages industry and she was amazed at the vast profits the local State alcohol distributors made. What should have been a 2% margin business was many times that. State protected private monopolies in all but name. Look at gambling as an other example.

    Political lobbying and big business interests collide to create virtual monoplies or oligopolies in many goods and services.

    Agree that many Americans must be feeling real pain from the drop in the value of their share portfolios but look who is getting the bailout - Wall Street. Big business interests again.

  10. Don't think this lady understands the severity of the problem. The authorities are realizing they must do everything they can now to avoid collapse. A double dip recession a few years from now is the least of their worries.

    That is what I say to bears as well who are worried that printing will cause inflation down the road. Ok the authorities can worry about that when the time comes. Right now they are trying to stay alive.

    You are right.

    Indeed it is the fear of creating a double dip recession that will cause authorities to hold interest rates too low for far too long and then inflation will explode.

  11. This is serious. I have metioned it a few times on HPC over the last few years.

    My Grandad farmed in the 1930s and he always said that farms then were derelict because farmers could not get working capital to be able to plant seed, buy breeding animals,or machinery. Without access to bank loan capital most farms cannot not function for more than a few months. In teh 1930s land stood idle just growing weeds and one of the reasons the UK was so short of food in WWII was becaue the productive capacity of UK farms was still heavily depleted in 1939. In the end the Govt threatened farmers wih seizure of land if they did not use it - I think they provided finance in some cases.

    There is a real risk in the UK is that next September/October the banks will simultaneously pull the bank overdrafts they have out to farmers as September is when most farmers have collected the income form selling their crops and their cash reserves are at a maximum. The banks did pull credit lines like this in 1979 and almost bankrupted my Dad. Removal of loan finance in the USA/Canada in July would prevent the planting of the next years Wheat crops that much of the world's bread is made from. Brazillian farms growing much of the world's soya could equally well be impacted.

    Ad to tha the severe difficulty that importers nd shippers are havng getting letter of credit finance and the world food commodity production / trading sysem could grind to a halt.

  12. I was talking to my wife about this very thing today.

    We remember the October 1987 stock market crash and its aftermath. The stock market really only started to rally from the bottom in about December 1990. However, the housing maket in London really peaked out in August 1989 after dual MIRAS was stopped and then went down from there and only started going up again in 1995 when City bonuses started flowing through and allowing people to escape their negative equity. The UK housing market lagged the London housing market on the way down and on the way up that time.

    On the basis of that crash I would say the UK housing market on average lags the stock market tops and bottoms by about 3 years but London housing market reacts 6 - 12 months quicker because of City bonus money.

  13. Economic collapse in Emerging Markets is the next big shoe to drop in my opinion. The world financial market has not even begun to get close to factoring in the impact of a mass sovereign debt default in Emerging Markets.

    This is going to be like the default on Govt bonds after the Russian Revolution combined with the Asian Crisis, combined with The Latin American Debt crisis all rolled into one giant mess.

    Brady Bonds II anyone?

    Oh no I forgot - the West is too busy dealing with its own financial crisis to help out this time round.

  14. Interesting post by treasury dealer. I tend to agree.

    I have a friend who works as an equity broker and she says the mood on the equity desks is also dire.

    Her main indicator of how people is the amount of chocolate bars being eaten. People are just sat around doing nothing but comfort eating on her desk. Not allowed to go for a drink at lunchtime or take clients out so champagne sales down and cholcolate sales up.

    I still think we have yet to see the final rout, capitulation and panic - but I think we are very very close and perhaps a massive collapse in the Asian markets or perhaps Eastern Europe will be the trigger as their economies are being absolutely trashed.

  15. I think this is a common situation and one that many in my extended family are in. They are sat in houses with land that is no doubt worth hundreds of thousands of pounds but live lives of poverty that the unemployed in the cities would not put up with.

    In many cases they are trapped, farming is genrally all they know, if they ever sat down and worked out their incomes I am sure most would be shocked but so long as the bills get paid they seem to just 'get by'.

    You could argue they should sell up and move to the city but I would suspect most I know would struggle to get much more than a labouring job but also the mindset of the rural poor is very different to the so called urban poor so they would hardly fit in in the cities.

    Exactly right.

    I lived for 20 years as a kid, teenager and young adult growing up like that on my Dad's farm. I got up and left realising that I would never make a decent living at it. I went straight to London and worked on a City trading desk just 3 weeks after sitting on a tractor for 10 hours planting 40 acres of wheat for the very last time.

    That was quite a change in my life but never regretted it for a moment. Eventually my Dad saw the light and sold out to a rich City guy three years ago and the guy has never made a profit even in the recent boom times for agricultural commodities and now the value of the land is falling too.

    Banks and rich investors are going to lose a fortune in agricultural land.

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