If Property Prices Needed To Be Reduced 25 - 30% In Jan 2009 How Much By Jan 2010

[andykn]

Thanks for that I do like a good graph even if I find it hard to understand them at times.

There are some really good ones at:

House Price Graphs stats

Don't know if you have seen them? Something I find interesting looking at the stats on the above link is:

So if prices previously going up say 64% saw falls of 30%, then 47% with falls of 37% what are we about to see with a rise of 147% and the RMBS market CLOSED?

Previous crashes did not have this HUGE problem with funding did they, the RMBS market drove the bubble from 2001 onwards resulting in nearly 2/3rds or £200bn in mortgage lending by 2007, that door is now closed that is a BIG gap which can't be filled. Interesting to see that previously we have seen 30 and 37% falls and the other crashes did not bring banks / building societies and the UK to brink of bankruptcy.

I don't think enough account is taken of the change in regional demand.

I bought my current 2 bed Zone 2 West London flat in 1993 at just above the "average" at the time. 3 years ago another one sold in the same block for over 50% more than the "average" at the time.

So if "average" prices slip back 40 odd percent from peak to 1995 earnings multiple levels, but London retains it's differential, does this mean that other areas that have not risen as much will still fall back by over 40%?

[tboy]

...and overseas investors withdrawing from stirling.

I had no idea it was such a popular location for inward investment in the first place!

[FreeTrader]

With GS predicting 10% further falls before bottom in 2010, and the potential to go beyond that if history is any judge of the severity of busts from booms, i'm really interested in what happens if/when bottom is called. OR does the length of time required to actually gauage the real bottom [particularly if there's a bit of volatility along the bottom] exacerbate any hopes of quick bouneback recovery.

I guess what i'm getting at, is will we get a bath shaped house price boom-bust. similar to the last housing crash, except perhaps not quite as elongated ? What's driving me to believe in that pattern is the lagging unemployment indicator which will continue on long after recession is over, even if recession lasts less than 5 quarters.

Also, i'm not convinced low interest rates or the ability to maintain low interest rates will and can act as the catalyst for a swift recovery....it can perhaps parachute and curtail the severity of the fall, but perhaps the desire to be less burdened with debt may override the infatuation with the monthly cost of servicing that debt in the minds of the mortgage debtors.

Maybe that switch in attitudes will be pressed somewhere along the way during the great deleveraging.

What i believe people do is use 2001 as the start of the irrational exuberance, when in fact the boom was well developed between 1997-2001. Perhaps 1997-2001 was the period required to make up for lost ground based an excessively bearish market in the mid-90's.

I've no idea what shape the bottom will take, or when it will be. If you want my gut feeling it's that the fall from peak this time around will be more severe (in real terms) than we saw in the last crash, but it's going to take longer to play out and we could see a couple of false bottoms along the way. I know that's not necessarily much comfort for anyone who has sat through the boom waiting to buy and just wants to get on with life, but on the other hand I do think that continued patience will reap high rewards.

I think andykn made a fair point above too - we have to remember that we're dealing with averages here, and if someone can get the house that they want at the price they're happy with then they shouldn't sit waiting for some national average yardstick to be reached. I bought the house I'm living in now in 1991 and although prices had fallen, I saw a tidy loss over the few years after purchase. It never bothered me because it was a house I'd always wanted to live in and I never regarded it as an investment. It's my family home.

Low interest rates are presently allowing sellers to hang on in hope for economic recovery, but in the end I don't see any way out for them. If the economy stays depressed then prices will just drift relentlessly downwards. If we see a recovery then interest rates will rise and the huge overhang of household debt will be a lead weight around borrowers' necks. Above all though, the awful fiscal position we're in is going to keep economic growth constrained for a decade or more.

The one thing we haven't seen yet is the phenomenon that eventually marks the true ending of all booms – revulsion against the investment class that precipitated the mania. Most people are still infatuated with residential property as an investment class and it's only the inability to access high LTV mortgages that's stopping them piling in again at what they see as depressed prices. The majority of owners still think their house is 'worth' the 2007 peak price, and it's merely a temporary aberration of the banking system that's preventing that value being recognised.

At some point I believe that attitude will change, and that's when we move towards genuine capitulation and realistic pricing.

Edit: punctuation

Edited May 23, 2009 by FreeTrader

[dissident junk]

I broadly agree with the general thrust that house prices have much more to fall.

Anecdotally .....

I went for a walk this afternoon and spied a house for sale that, for the first time, looked like 'a possible'. The details were in the window, and it was, what I considered, to be a price we could do.

So I did a bit of research on mortgages and deals when I got home.

And found out that, even under an intro period, with a reasonable IR, we would be paying more a month if we bought that property than we do rent on our current house which is about twice (or maybe even three times) the size of the one offered for sale. Plus after the intro, we would go onto variable IR -- and who knows where they may be post 2011? The there is the real fear I have of buying too small for future requirements at present, only to find when we try to sell in five years, that the price has tumbled and we are in neg. eq. and can't move.

And I can seriously see that happening around here in the North.

So it's just not worth it at the moment. I will wait, as I planned to do, till 2010/11.

[eric pebble]

Dont know if Halifax were big Self-Cert/Liar loan issuers, but id assume once volumes increase again their reported 'average' earnings will plummet. Some (most) people with liar loans were pretty economical with the truth it seems.

Oh yes!! They certainly were "economical with the truth"!

Halifax - aka HBOS were THE experts as Purveyors of LIAR LOANS...... Watch the video linked below in my signature. The boss of HBOS - a certain Mr James Crosby - now SIR James [given a Knighthood by Gordon Git for "services to UK Financial Services" HA!!!] -- refused to be interviewed over mass-selling of LIAR LOANS - filmed by undercover investigators.... That was way back in 2003!!!!

[HAMISH_MCTAVISH]

The majority of owners still think their house is 'worth' the 2007 peak price, and it's merely a temporary aberration of the banking system that's preventing that value being recognised.

At some point I believe that attitude will change, and that's when we move towards genuine capitulation and realistic pricing.

Yeah, good luck with that.....

The fact is that overpriced houses in the UK did not cause this crash. A sudden and savage freezing of the worlds credit markets caused by the sub-prime meltdown in the USA caused the global credit crunch, and the subsequent mortgage rationing caused the UK price crash. Had that not happened, prices may well have continued upwards for a long time yet, although there is no doubt that they would have crashed eventually for some reason or another. House prices may well have been too high in some areas, but thats not what caused the crash, and most people know this.

Therefore most owners do believe, and IMO will continue to believe, that their houses are "worth" peak prices, and that the crash is nothing but a temporary abherration of the banking system.

There will be no genuine capitulation, and no move towards "realistic" pricing from anyone but the very, very few distressed sellers.

True capitulation would require that ALL sellers, up and down the chain, were willing to discount prices by a similar percentage. That is just not happening in most areas, and certainly not where I live. And the reason why is obvious.

The government has taxed pensions into oblivion. For the last 15 years or more, property has been the only tax efficient means of squirreling away money for retirement. Those few million people at the top of the chain, nearing retirement, and who had counted on downsizing and releasing a couple of hundred thousand to fund retirement, are the ones who are refusing to capitulate, because they simply cannot afford to. They are joined by another few million in the middle of the chain, who whilst theoretically wanting to upsize, cannot find sellers willing to discount by the same percentage they would have to to sell. And then another few million mid level buyers who are in negative equity and thus cannot afford to move as the banks won't port NE loans.

FTB's and their lack of finance may have been the key contributer to the start of the crash, being at the bottom of the pyramid as is frequently pointed out. But it is the roadblock at the top of the pyramid, the downsizers who cannot afford to discount and would rather stay put for another decade than do so, that will be the cause of the end of the crash.

The UK love of property is strong, and the longer mortgage rationing lasts, the more it does nothing but fuel further resentment towards the banks for taking the bailout and not restarting normal lending, despite their promises, and fuel further political pressure to fix the problem through printing yet more money to fund mortgage lending if required.

Purely anecdotal I know, but a friend of mine is looking to upsize at the moment. He currently lives in a 3 bed house, has two kids, and is looking to move up to a 5 bed house. Whilst he is willing to sell his house for less than peak prices, he has been unable to find a larger family house with a similar % discount. Some discount, yes, but not enough to compensate. Meaning that the gap for him has widened, not narrowed. After looking for a year, and entering serious negotiations on half a dozen properties to no avail, he has now taken his house off the market completely and is building an extension, which will cost him 50K, but is less than half the cost of moving. I expect we'll see a lot more of this sort of thing.

[Sybil13]

Wherever you look the statistics seem to be unprecedented. House prices fell at their fastest rate ever in 2008. Sales are lower than at any time since records began in the 1950s. Housing starts are at the lowest level seen in peacetime since the 1920s.

According to many forecasters, house prices may fall even more this year and house building will slump to another record low. And while lending and transactions may see modest rises, arrears and repossessions will soar. It is even possible that 2009 will see more repossessions than homes built.

All of this is happening as the news on the economy in general gets grimmer by the day. Each item comes complete with a chilling historical comparison. Unemployment is set to rise to levels last seen in the early 1980s, output to shrink at a pace last seen in the 1970s and the International Monetary Fund says the UK economy is facing its most difficult period since the 1930s.

The government response is unprecedented too: interest rates cut to their lowest level since the Bank of England was created; a cascade of initiatives to limit repossessions; nationalisation in all but name of many of the leading banks; and billions of pounds in extra government loans to prop up bank lending.

In the blue corner stand recession, unemployment, slump and even depression. In the red (deep in the red) are the prime minister who saved the world, the Bank of England and the newly humbled banks. And in the middle, the housing market – its fortunes inextricably linked with the rest of the economy – and homeowners and potential buyers facing unemployment and a mortgage famine..........

......Just about the only thing for which there is a precedent is what a year ago many pundits were saying would never happen: that the housing market boom would be followed by a bust. House prices trebled between January 1997 and August 2007. They have already fallen 19 per cent since then.

This is the fourth time we have seen the same scenario in the housing market since the war......

.......Taking the Nationwide’s figures, the 1997 to 2007 boom saw prices rise by 147 per cent in real terms. Within that, prices rose 76 per cent between 2001 and 2007. ....

The first boom and bust happened in the early 1970s. From 1971 to 1973, prices rose by 64 per cent in real terms. By the summer of 1977 they had fallen back by 30 per cent. The second happened between 1978 and 1982. Prices rose by 69 per cent between the start of 1978 and mid-1981, then fell 6.3 per cent in the next year. Boom and bust number three came between 1986 and 1995. This saw prices rise by 47 per cent in real terms between 1986 and 1989 and fall back 37 per cent by 1995.These figures make it seem as though booms are always bigger than busts. But this is a trick of the maths: an increase from, say, £50,000 to £100,000 is a rise of 100 per cent; a slump back to £50,000 is a fall of 50 per cent.

As I have already said, if a 64% rise saw prices fall back 30% , and a 47% price saw property fall back 37% and this is not like any other crash with the RMBS market closed and £200bn of funding gone, interest rates only having one way to go , unemployment out through the roof I will leave it up to you to consider what will happen next.

One reason for this boom in cheap home loans was the rise in 'residential mortgage-backed securities' (RMBS). These were bonds made up of parcels of mortgages which were sold to major investors, such as pension funds and insurance companies. Alas, as the US and UK housing markets started to slump, the value of these mortgage bonds dived and the market froze. The effective collapse of the RMBS market means that this one-off credit event may not return for years, if not decades.

Edited May 24, 2009 by Sybil13

[spivT]

Yeah, good luck with that.....

The UK love of property is strong, and the longer mortgage rationing lasts, the more it does nothing but fuel further resentment towards the banks for taking the bailout and not restarting normal lending, despite their promises, and fuel further political pressure to fix the problem through printing yet more money to fund mortgage lending if required.

in case you've forgotten, the vitriol toward bankers was predominantly about pay and renumeration for one or two high profile names. The meejia and public quickly moved on from that, and now if you haven't noticed MPs and claims for second home mortgage interest relief is dominating the headlines and causing most anger.

Most people can see the dichotomy between a banking sector blamed [rightly or wrongly by the meejia] for excessive and reckless lending and leverage as the shit hit the fan, and the subsequent imploring to 'lend at 2007 levels' as if a return to 'normality' in a still declining market is needed or even desired. In lieu of any announcements from govt. or the FSA about genuine reform anger towards the banks re lending levels doesn't really have much substance....the govts. protests are not backed up with any reform or promises, and as for use of taxpayer money well they've got to get their own house in order first before they can throw stones at the banks.

tbh i don't think your going to see your normal [aka 2007] lending in an environment where unemployment will continue to rise long after recession has ended. Plus, in recent years the average deposit for ftb's has been far above the 5% associated with your preconceived notions about normal lending at up to 95% LTV.

I don't doubt that 90% and 95% LTV opens the market up to more potential buyers, just as the 100% mortgage opened up the market to the no money down property chancer, but those without sufficient deposits will not be lent to at high multilpes and anyway this is what banking sector does after a financial shock....it hoardes money and becomes more risk averse in an effort to rebuild balance sheets. tough. deal with it. the authorities may want to avoid that situation but they could well face the same issues that arose in japan in the 90's.

no need to get your panties in a twist about how much and to whom the banks lend this is the great recession we have to have.

[andykn]

As far as I recall "reckeless lending" and liar loans didn't play a big part in the last boom & drop.

Are repossessions significantly higher this time round? This would show that "reckless lending" was more to blame this time.

Rather than just being overpriced like last time and the drop triggered by freezing of credit markets.

[Sybil13]

Purely anecdotal I know, but a friend of mine is looking to upsize at the moment. He currently lives in a 3 bed house, has two kids, and is looking to move up to a 5 bed house. Whilst he is willing to sell his house for less than peak prices, he has been unable to find a larger family house with a similar % discount. Some discount, yes, but not enough to compensate. Meaning that the gap for him has widened, not narrowed. After looking for a year, and entering serious negotiations on half a dozen properties to no avail, he has now taken his house off the market completely and is building an extension, which will cost him 50K, but is less than half the cost of moving. I expect we'll see a lot more of this sort of thing.

With nearly 4 million home owners in or close to negative equity and lenders valuing 40% down for remortgages, a £50K extension? To be honest we may not be about to see a LOT MORE of this sort of thing! However, can't help feeling that if he thought he could sell and buy a 5 bed this year if sellers were playing the game he CERTAINLY could have next year and perhaps got more of what he wanted. I do think there is a lot of difference between a 3 bed with an extension and a 5 bed , don't you know! 5 bed is probably more in the area that one would want to live in! 3 bed with extension perhaps might be a bit close to tent city!

[dances with sheeple]

Yeah, good luck with that.....

The fact is that overpriced houses in the UK did not cause this crash. A sudden and savage freezing of the worlds credit markets caused by the sub-prime meltdown in the USA caused the global credit crunch, and the subsequent mortgage rationing caused the UK price crash. Had that not happened, prices may well have continued upwards for a long time yet, although there is no doubt that they would have crashed eventually for some reason or another. House prices may well have been too high in some areas, but thats not what caused the crash, and most people know this.

Therefore most owners do believe, and IMO will continue to believe, that their houses are "worth" peak prices, and that the crash is nothing but a temporary abherration of the banking system.

There will be no genuine capitulation, and no move towards "realistic" pricing from anyone but the very, very few distressed sellers.

True capitulation would require that ALL sellers, up and down the chain, were willing to discount prices by a similar percentage. That is just not happening in most areas, and certainly not where I live. And the reason why is obvious.

The government has taxed pensions into oblivion. For the last 15 years or more, property has been the only tax efficient means of squirreling away money for retirement. Those few million people at the top of the chain, nearing retirement, and who had counted on downsizing and releasing a couple of hundred thousand to fund retirement, are the ones who are refusing to capitulate, because they simply cannot afford to. They are joined by another few million in the middle of the chain, who whilst theoretically wanting to upsize, cannot find sellers willing to discount by the same percentage they would have to to sell. And then another few million mid level buyers who are in negative equity and thus cannot afford to move as the banks won't port NE loans.

FTB's and their lack of finance may have been the key contributer to the start of the crash, being at the bottom of the pyramid as is frequently pointed out. But it is the roadblock at the top of the pyramid, the downsizers who cannot afford to discount and would rather stay put for another decade than do so, that will be the cause of the end of the crash.

The UK love of property is strong, and the longer mortgage rationing lasts, the more it does nothing but fuel further resentment towards the banks for taking the bailout and not restarting normal lending, despite their promises, and fuel further political pressure to fix the problem through printing yet more money to fund mortgage lending if required.

Purely anecdotal I know, but a friend of mine is looking to upsize at the moment. He currently lives in a 3 bed house, has two kids, and is looking to move up to a 5 bed house. Whilst he is willing to sell his house for less than peak prices, he has been unable to find a larger family house with a similar % discount. Some discount, yes, but not enough to compensate. Meaning that the gap for him has widened, not narrowed. After looking for a year, and entering serious negotiations on half a dozen properties to no avail, he has now taken his house off the market completely and is building an extension, which will cost him 50K, but is less than half the cost of moving. I expect we'll see a lot more of this sort of thing.

False. One house on an estate selling for 100k less( death, divorce, debt, repo,partner insists on moving to Mongolia or else etc etc) means that potential buyers (even if they could get the funds from somewhere ) will hold back for the new price. That is called GREED. You don`t understand human behaviour. The same traits, greed and fear that helped cause the bubble are going to ensure that your houses are worth 50% less than 2007 at the of all this.

[Sybil13]

Bizarre logic. What caused/triggered the crash is largely irrelevant. Something eventually comes along to pr1ck all bubbles. Now that it has finally happened prices are falling.

HAMISH MCTAVISH The UK love of property is strong, and the longer mortgage rationing lasts, the more it does nothing but fuel further resentment towards the banks for taking the bailout and not restarting normal lending, despite their promises, and fuel further political pressure to fix the problem through printing yet more money to fund mortgage lending if required

You just dont' get it do you? This *is* normal. 2001-2007 was the exception. Get used to it.

And even this isn't "normal" is it?

It's not "normal" is it for the BOE to say, despite banks having been given how much? :

Mervyn King said although banks' survival had been assured by recent bail-outs, they would not start lending freely unless more capital was pumped into their balance sheets.

Mr King said: "There is a big difference in practice between the levels of capital banks need to be stabilised... and those required to persuade banks to exhibit normal levels of risk-aversion. How big that gap is is impossible to say... but it looks as if it will be quite big.

If the banks are going to continue as private sector entities they will naturally behave in a risk-averse way for a while... [The state] could put in more public sector capital but that has ramifications for the Governments' shareholdings in banks."

It's not "normal" for the FSA to be speaking of taking away the independence of building societies and articles speaking of mortgage lending "drying up".

Without funding, mortgage lending will dry up. “To the extent that funding is restricted, it will restrict our ability to lend,” Nationwide chief executive Graham Beale told the TSC. The BSA’s Adrian Coles reckons “it is quite conceivable that lending will fall this year” as funding evaporates. ......

QE is not going to be able to bridge the £200bn gap left by the RMBS market closing let alone the gap left by low interest rates / Moody's /Fitch downgrades, overseas investment and on and on and on.....

Nothing like this has EVER happened, all we have are the examples of previous crashes but nothing has been like this one, but if we do look back and remember that this time things are MUCH MUCH worse, 1973 crash had seen a rise of 64% and a fall by 1977 of 30%.

1986 - 1995 boom saw prices rise 47% and fall 37%

Taking the Nationwide’s figures, the 1997 to 2007 boom saw prices rise by 147 per cent in real terms, that is 100% higher than the last boom, so will see 137% falls?

Edited May 24, 2009 by Sybil13

[dances with sheeple]

You just dont' get it do you? This *is* normal. 2001-2007 was the exception. Get used to it.

And even this isn't "normal" is it?

It's not "normal" is it for the BOE to say, despite banks having been given how much? :

It's not "normal" for the FSA to be speaking of taking away the independence of building societies and articles speaking of mortgage lending "drying up".

QE is not going to be able to bridge the £200bn gap left by the RMBS market closing let alone the gap left by low interest rates / Moody's /Fitch downgrades, overseas investment and on and on and on.....

Nothing like this has EVER happened, all we have are the examples of previous crashes but nothing has been like this one, but if we do look back and remember that this time things are MUCH MUCH worse, 1973 crash had seen a rise of 64% and a fall by 1977 of 30%.

1986 - 1995 boom saw prices rise 47% and fall 37%

Taking the Nationwide’s figures, the 1997 to 2007 boom saw prices rise by 147 per cent in real terms, that is 100% higher than the last boom, so will see 137% falls?

Like asking for a "zero" at the barbers

[Sybil13]

Like asking for a "zero" at the barbers

You should be so lucky:

Obama openly says what anyone with common sense has known for quite some time: the US is broke, and will not be able to honor its financial and fiduciary obligations.

The question remains how the US restructures that debt and how big a haircut the debt holders will take.

20%? 30%? More like upwards of 50% at least in real terms.

[Giordano Bruno]

Thanks for the post very informative. I am a total newb about all this house stuff so I do like posts like this, that confirm my original belief (before I found this site) that houses prices could not keep going up.

Naively my only logic for this was that wages were not going up at the same rate as house prices!

I wouldn't call that naive. Very sensible, I would say. If fact, it is the essence as to why every bubble must, and therefore will, inevitably burst.

[Fairies Wear Boots]

Oh I know.

Lets dream about a 40% drop and put it in big red letters. Everyones bound to take notice and panic. I bet this time next week houses will have fallen 80%.

NOT

Base rate cut to shreds. House prices have fallen. WTF? That doesn't spell good news when Interest Rates go up again does it?

I don't care how little interest I'm getting on my money. Still better than a two percent loss a month.

[eric pebble]

I don't care how little interest I'm getting on my money. Still better than a two percent loss a month.

..... on a three bed dog kennel "worth" £450k - mortgaged 99%...

[50%deposit]

STAY OUT OF THE PROPERTY "MARKET":

ANOTHER 40% DROP TO GO.......

pardon? I cant quite hear you!!! Can you please speak up!!!

[eric pebble]

Yeah, good luck with that.....

The fact is that overpriced houses in the UK did not cause this crash. A sudden and savage freezing of the worlds credit markets caused by the sub-prime meltdown in the USA caused the global credit crunch, and the subsequent mortgage rationing caused the UK price crash. ...../.

McTwat: You are very thick. Do you have any O'levels/GCSE's?

[The McGlashan]

Purely anecdotal I know, but a friend of mine is looking to upsize at the moment. He currently lives in a 3 bed house, has two kids, and is looking to move up to a 5 bed house. Whilst he is willing to sell his house for less than peak prices, he has been unable to find a larger family house with a similar % discount. Some discount, yes, but not enough to compensate. Meaning that the gap for him has widened, not narrowed. After looking for a year, and entering serious negotiations on half a dozen properties to no avail, he has now taken his house off the market completely and is building an extension, which will cost him 50K, but is less than half the cost of moving. I expect we'll see a lot more of this sort of thing.

A potential property buyer has re-evaluated his position and decided to make the best of the status quo. No new business for the mortgage lenders - no extra froth into the property market.

The very picture of capitulation. Thank-you for providing this anecdotal example, Hamish.

[VeryMeanReversion]

McTwat: You are very thick. Do you have any O'levels/GCSE's?

Hamish was right. There appears to be no upper limit that people are prepared to pay (borrow). Removing that option by force was the only reason prices dropped (and will continue to do so).

There is still no general turn in sentiment as far as I can see. Sad for us but true.

VMR.

[Guest BAREBEAR_soon to be ALIVA]

And the rest - there is going to be an almighty drop in prices!

Indeed, it's been revealed to us just how much our beloved leaders and Government are THE Vi's in property, working in close conjunction with Finance and Building Industries.

When they are swept aside after elections, the whole thing is going to implode!

Brown etc are the ones who have artificially extended the BOOM, many of us did call the right time. circa 2005. for a crash but it's been held up for the pure greed of of The City & our Heirarchies esp thru LIAR LOANS !

Many people thought we were due a crash in 1999.

I reckon we've had 10 years of artificial rises on house prices. You've only got to look at wages to realise its way out of kilter.

Edited May 25, 2009 by BAREBEAR_soon to be ALIVA

[HAMISH_MCTAVISH]

A potential property buyer has re-evaluated his position and decided to make the best of the status quo. No new business for the mortgage lenders - no extra froth into the property market.

The very picture of capitulation. Thank-you for providing this anecdotal example, Hamish.

On the contrary, market capitulation would require the sellers to agree to lower prices.

That has clearly not happened in my example.

Furthermore, an existing lower priced house has been removed from sale and modified into a larger house, that will sell for far more in future. Reducing the stock of affordable housing yet again.

It's the opposite of capitulation.

[wealthy]

On the contrary, market capitulation would require the sellers to agree to lower prices.

That has clearly not happened in my example.

On the contrary market capitulation would require the buyers to agree to lower prices.

This has clearly happened everywhere except Mcfantasy land

Edited May 25, 2009 by wealthy

[HAMISH_MCTAVISH]

Hamish was right. There appears to be no upper limit that people are prepared to pay (borrow).

Oh there is a limit. It just hadn't been reached. Therefore the lesson (if there is one) hasn't been learned. Therefore the process will repeat.

Removing that option by force was the only reason prices dropped (and will continue to do so).

Agreed. However prices will only drop so far. The underlying pressures remain, and the next boom is being fuelled as we speak. The force being applied is disproportionate. The people will not accept it indefinitely.

There is still no general turn in sentiment as far as I can see. Sad for us but true.

And nor will there be.