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Spring Bounce Over

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Everyone (with any hpc knowledge) realizes the pronouned 2009 spring bounce will end very shortly (likely end may).

But a few questions

1) There was a definate bounce this early spring (fact) but what was it's true magnitude??

2) Will falls accelerate and by how much?

3)Inflation, in my view a major factor, how much affect will it have?

I predicted the top of the current cycle and originally predicted HPC of between 36% to 44% falls ending 2012 I have subsequently changed this to falls total falls of 39% to 48% ending 2011 (due to bigger falls than expected, economic situatition and my fear of inflation.)

I know my analysis is sound but can anyone give me anywhere I could be mistaken?

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Everyone (with any hpc knowledge) realizes the pronouned 2009 spring bounce will end very shortly (likely end may).

But a few questions

1) There was a definite bounce this early spring (fact) but what was it's true magnitude??

2) Will falls accelerate and by how much?

3)Inflation, in my view a major factor, how much affect will it have?

I predicted the top of the current cycle and originally predicted HPC of between 36% to 44% falls ending 2012 I have subsequently changed this to falls total falls of 39% to 48% ending 2011 (due to bigger falls than expected, economic situation and my fear of inflation.)

I know my analysis is sound but can anyone give me anywhere I could be mistaken?

For what it is worth I totally agree that the spring bounce will end within a month. I am keeping a close eye on the SO41 region, Lot's of houses suddenly under offer, mainly the obvious better houses at their correct (for now) money. Nothing really over priced has gone under offer in my view. One must remember whilst there are FTB's out there and people like us on HPC, there are so many who want to move who will not STR.

1. By how much did it bounce? I really could not guess.

2. I do not think they will excelerate, just continue as falling had been, 2009 will show a drop of 10% - 13%. The reason is there will be to few new houses coming to the market for a more dramatic drop.

3. I think unemployment or the fear of unemployment will be the major factor, not inflation. Inflation will increase in 2010, maybe interest rates as well but this probably will be in 2011.

What I would like to add is this. I have never seen so many bearish remarks in newspaper forums. I read and add the odd comment in the Times and Mail, I think it must be 95% bearish in these forums, the public are not fooled by VI's including journalists.

Edited by Tim Miller

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What do you mean by 'bounce'? There does seem to have been increased activity/interest in the market BUT prices have kept falling. So a bounce in activity? Bounce in prices? - well, there is no evidence of that, just evidence of prices falling at record speed and depth. We seem to have the combination that the HPC bulls hate (and try to deny) - increased activity with falling prices type of bounce this Spring.

Will falls accelerate once the bounce in interest dies down (I too think this (the bounce) will disappear over the summer)? - don't know. I think the massive increase in unemployment will begin to impact on the market come the autumn/winter and will increase the number of forced sales significantly - so I'm expecting falls to continue but probably at a similar rate that we have seen over the last 18 months. If the last 18 months average rate of fall is maintained that will be a very fast rate of fall in prices compared to other UK house price crashes. During the 1990s HPC there were only 5 months (from begining of 1989 till end of 1995 - 84 months) when house prices fell deeper than -1%.

I guess my response, then, is very similar to Tim Miller.

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1) There was a definate bounce this early spring (fact) but what was it's true magnitude??

The number of houses coming onto the market are at an all time low for the spring selling season. But then again, we have seen some house price rises and definate increases in transactions. My personal experience locally (having been viewing a LOT recently) is that asking prices are not being met however, prices acheived at sale are WELL below asking price. All the spring bounce has done is increase volume, get a couple of cash buyers to fire their load (better for me) and drive prices lower.

2) Will falls accelerate and by how much?

Yep. Unemployment, uncertainty and a sercond tightening of mortgage lending I reckon will happen, and we will go bac kto the bad old days of 1-2% per month drops. Sweet. I predict prices bottoming in Q3-Q4 2010, with the remaining falls happening due to low inflation. Bump along for at least 3-4 years before restoration of growth with wages. No rush to buy.

3)Inflation, in my view a major factor, how much affect will it have?

Not much. Biflation is my major concern, although would be good to see all those fat chavs starve a bit. Save me a few bob as the NHS wont be giving wasters heart transplants and medicine for type 2 diabeties. I dont think we will see commodity prices getting out of control for another 12-18 months.

All in all, big price falls still to come, what I term the major capitulation, the next down step is going to be the biggest, most devastating for the market. Once it is over, you will have a fair old while whilst the rest of the market adjusts to the new market paradgim, with nice, leafy villages and towns taking longest to correct.

Which is great, as I have my 40% deposit in place by next March, and I only realised yesterday I could have bought a 5 year old newbuild (5 bed executive, double garage not a bad estate) for 3.5X single salary.

I reckon this website has saved me over 300K over the life of a mortgage! :o

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Judging by the number of threads started "I have just done it. Am I mad?" type posts. There does seem to be a bit of a Spring 'bounce'.

But funnily enough not because of optimism about property. But because money elsewhere is doing f*ck all and the worry that it will dissipate.

I've read two in the last few minutes - Shedfish and mbga9pgf above are actively looking.

My brother has just bought a house for £1.2m down from £1.5m with a £900k mortgage from Abbey. I think he is totally bonkers personally but it ties in with a small spring bounce. There are many people who see the correction and low interest rates as an opportunity to move to their dream house.

I am one of those who see two waves of price falls. The first has happened due to lack of credit. The second based on unemployment, cuts in public sector and rising interest rates has yet to happen.

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My thoughts for what they are worth are based around and article written by the CEBR :

Traditionally, the Easter weekend marks the start of open season in the housing market, with new year plans for a house move turning into some serious action for estate agents. Analysis of housing transactions data shows that July almost always marks the peak month for moving home, and with a typical three to four month lead time from first enquiry to completion we can see that the Easter weekend is one of the most important dates in the estate agent’s calendar. But will this weekend mark the start of the turning point in the housing market, or another crushing disappointment for those estate agents lucky enough to still be in a job?

Based on the above I guess March and April's approvals will be the peak this year , do previous stats show that March and April are peak months for approvals if July is the peak month for moving? March approvals were up but a 1/3 rd down on 2008, when do the April approval figures come out?

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Everyone (with any hpc knowledge) realizes the pronouned 2009 spring bounce will end very shortly (likely end may).

But a few questions

1) There was a definate bounce this early spring (fact) but what was it's true magnitude??

2) Will falls accelerate and by how much?

3)Inflation, in my view a major factor, how much affect will it have?

I predicted the top of the current cycle and originally predicted HPC of between 36% to 44% falls ending 2012 I have subsequently changed this to falls total falls of 39% to 48% ending 2011 (due to bigger falls than expected, economic situatition and my fear of inflation.)

I know my analysis is sound but can anyone give me anywhere I could be mistaken?

1. Spring bounce was simply a rise in volumes, not prices. Its effect will be to cement those lower agreed prices and cause further falls as the year goes on.

2. I reckon we'll see falls accelerate for the simple reason that the full effects of the recession are yet to be felt: unemployment rising, return to sane levels of mortgage lending and the spectre of higher interest rates means that those mortgages rates are only going one way in the immediate future... <_<

3. Inflation? I personally think deflation for the next 18 months or so. But the inflation genie is certainly in the bottle waiting to be released and will obviously have its effect...

The precision of your estimate is quite bold...! However, with your inflationist head on, are you thinking nominal falls or real term falls?

Edited by red

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Judging by the number of threads started "I have just done it. Am I mad?" type posts. There does seem to be a bit of a Spring 'bounce'.

But funnily enough not because of optimism about property. But because money elsewhere is doing f*ck all and the worry that it will dissipate.

True, but at the moment for short-term investors, it's about preserving your wealth, not making loads of interest.

Buying a property right now and watching your deposit being consumed as you slide into NE is pure madness when you could lock it into a bond for a year while things play out...

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True, but at the moment for short-term investors, it's about preserving your wealth, not making loads of interest.

Buying a property right now and watching your deposit being consumed as you slide into NE is pure madness when you could lock it into a bond for a year while things play out...

Where do you put your money? It's a very good point. Pensions? you gotta be kidding, Stocks and shares? Well that is now very risky, so it's back to what people understand, bricks and mortar. The trouble is too many of Joe public have not got a financial clue. You know what this is about, it's about fear, fear of missing out, after so many years of seeing HPI people would rather get in now and maybe see prices drop 10% than leave it too late and see prices go up 10%.

Edited by Tim Miller

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I agree there has been a Spring bounce, but I think it may have ended already.

I have seen reasonably pronouced rise in activity, but can't say for how much they have been going for, hopefully a substantial discount on the asking price.

Unfortunately the only property on the market is substandard and very over priced. I'm hoping potential vendors will think that it is now a good time to sell and will flood the market with new reduced price houses.

The estate agents I have been talking to are very confident, so I wouldn't be surprised to see new properties come on higher than previous asking prices.

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Where do you put your money? It's a very good point. Pensions? you gotta be kidding, Stocks and shares? Well that is now very risky, so it's back to what people understand, bricks and mortar. The trouble is too many of Joe public have not got a financial clue. You know what this is about, it's about fear, fear of missing out, after so many years of seeing HPI people would rather get in now and maybe see prices drop 10% than leave it too late and see prices go up 10%.

It depends a lot on just how risky you want to play it - there's potentially a lot to be made out there (gold? silver? corporate bonds if you're a deflationist..?) But I did say 'short term' and for me, it's a no-brainer where property is concerned as I believe it'll fall by a lot more than 10%...

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Judging by the skimpy property section in my local rag, id say its well and truly over.

I was surprised to see its only 5 pages of sales. North Dorset area. Most oF the ads are for huge estates too, taking up half a page each. Most of the regular guys are not advertising.

Lending down 9%. Bounce over.

Edited by shindigger

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It depends a lot on just how risky you want to play it - there's potentially a lot to be made out there (gold? silver? corporate bonds if you're a deflationist..?) But I did say 'short term' and for me, it's a no-brainer where property is concerned as I believe it'll fall by a lot more than 10%...

I totally agree with you, there are other investments out there, but as I said, Joe public won't go there. All they know is their bank, their building society or for some the stock market, the only thing they know about buying a bond is cinema ticket to watch "James".

On the subject of how far will it fall, of course it's just down to guessing albeit and educated guess. My guess is 10% -13% this year as I am sure the second half of the year will be dead for selling. I would think 2010 will see another 10% decline or do you remember that lovely term "Correction" VI's used. I would not underestimate what unemployment will do to the 2010 market of possible interest rate increases. By the time we hit 2011 enough time would have passed to kill of all those thoughts of 'getting in now before prices turn around'.

It's now predicted that commercial rents will not stop going down until 2012 so commercial values are only going down for a couple of years. This is a global crash, not like the last UK crash, it's not going to be 'over by Christmas' as our simpleton chancellor still predicts.

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Where do you put your money? It's a very good point. Pensions? you gotta be kidding, Stocks and shares? Well that is now very risky, so it's back to what people understand, bricks and mortar. The trouble is too many of Joe public have not got a financial clue. You know what this is about, it's about fear, fear of missing out, after so many years of seeing HPI people would rather get in now and maybe see prices drop 10% than leave it too late and see prices go up 10%.

People don`t understand bricks and mortar though, that is the root of the problem. Far better to invest in properly researched companies after we see who survives and there is more transparency? I think we will soon see a realisation among the sheeple that prices are not coming back, then we will see lurid self preserving panic in it`s rawest form :P

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My brother has just bought a house for £1.2m down from £1.5m with a £900k mortgage from Abbey. I think he is totally bonkers personally but it ties in with a small spring bounce. There are many people who see the correction and low interest rates as an opportunity to move to their dream house.

I am one of those who see two waves of price falls. The first has happened due to lack of credit. The second based on unemployment, cuts in public sector and rising interest rates has yet to happen.

I believe that there is also a backlog of repos waiting to be executed, and more repos will join the queue when buyers come off short-term mortgage contracts and have to re-finance in the new harsher conditions. This will add to the downward pressure on hp. Edited by Fly by Night

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Everyone (with any hpc knowledge) realizes the pronouned 2009 spring bounce will end very shortly (likely end may).

But a few questions

1) There was a definate bounce this early spring (fact) but what was it's true magnitude??

2) Will falls accelerate and by how much?

3)Inflation, in my view a major factor, how much affect will it have?

I predicted the top of the current cycle and originally predicted HPC of between 36% to 44% falls ending 2012 I have subsequently changed this to falls total falls of 39% to 48% ending 2011 (due to bigger falls than expected, economic situatition and my fear of inflation.)

I know my analysis is sound but can anyone give me anywhere I could be mistaken?

My own predictions ( and wishfull thinking too ? ) put the bottom at around the latter part of 2011.

I thought you might be interested to see an extract from a spreadsheet which I tweak occassionaly.

I have added 'labels' based on the now infamous ' Anatomy of a Bubble ' seen elsewhere on this site.

May2009_guess.jpg

post-7570-1243160935_thumb.jpg

Edited by space monkey

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People don`t understand bricks and mortar though, that is the root of the problem. Far better to invest in properly researched companies after we see who survives and there is more transparency? I think we will soon see a realisation among the sheeple that prices are not coming back, then we will see lurid self preserving panic in it`s rawest form :P

I disagree with 'People don't understand bricks and mortar' They understand enough to go out and buy over 1,000,000 BTL's, well that's the figure quoted for BTL mortgages, just think there will be business loans as well to add. I like many others think these mortgages were a huge mistake and should be stopped.

As for prices, we agree, I do not see those turning anytime soon and that's with the grim news we have now. We have Europe to crash and burn next as it surely will. Did you see the article a few days ago

http://www.cnbc.com/id/30308959?slide=1

"The worlds biggest debtor nations", we came in as the 2nd biggest,very, very frightening!

Edited by Tim Miller

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