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Prophets Of Gloom Have Sold House Buyers Short.....

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Prophets of gloom may just have sold housebuyers short.....

Gloomsters predicting a housing market crash should look away now.

Prices actually rose in May, the average home appreciating by £2,300 to £154,000, according to Nationwide Building Society. That’s the second rise in three months.

This is not really in the script. Prices, having overshot on the way up, should overshoot on the way down. By any traditional measure of affordability, they have further to slide. Add in high levels of job insecurity and low levels of mortgages on offer and the scene seemed to be set for a continuation of the plunge of the past 18 months.

However, recent figures from both Nationwide and Halifax show at the very least a pause and possibly the beginning of a turning point.

Even estate agents are frightened of suggesting the bottom has been reached. Everyone points to the slump of 1991-95, where there continued to be frequent monthly falls well into 1995.

That is true. The start of the recovery was patchy. But the truth is the bottom was reached quite early in that cycle – to be precise, in November 1992, when the average price sank to £49,600. That turned out to be the floor, although there were many still predicting further falls. They don’t ring a bell at the bottom of any market.

This week financial regulators revealed that they were stress-testing the British banks to ensure that they could cope with a 50 per cent peak-to-trough slide: that would see the average price tumbling to £93,000.

Buyers sitting on their hands in anticipation of that happy day are likely to be disappointed.

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Guest BoomBoomCrash

Incomes falling, house prices rising; yeah that'll fly.

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:lol:

For all those so fond of quoting history...... That the last slump lasted for many years......

Why exactly is it that you don't mention that the bottom was reached the year after it started?????

An inconvenient truth indeed!!!!!!!!!!!!!!!!!!!!

Everyone points to the slump of 1991-95, where there continued to be frequent monthly falls well into 1995.

But the truth is the bottom was reached quite early in that cycle – to be precise, in November 1992

Oh dear..... I hadn't realised that until now. HPC bears have been trying to re-write history.

:lol::lol::lol::lol:

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For anyone wondering:

LINKY

And just to provide a tiny bit of balance (sorry to spoil your fun)

Prices, having overshot on the way up, should overshoot on the way down. By any traditional measure of affordability, they have further to slide. Add in high levels of job insecurity and low levels of mortgages on offer and the scene seemed to be set for a continuation of the plunge of the past 18 months.

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:lol:

For all those so fond of quoting history...... That the last slump lasted for many years......

Why exactly is it that you don't mention that the bottom was reached the year after it started?????

An inconvenient truth indeed!!!!!!!!!!!!!!!!!!!!

Everyone points to the slump of 1991-95, where there continued to be frequent monthly falls well into 1995.

But the truth is the bottom was reached quite early in that cycle – to be precise, in November 1992

Oh dear..... I hadn't realised that until now. HPC bears have been trying to re-write history.

:lol::lol::lol::lol:

here is halifax data: floor in 1995, and it wasn't a consistent path down.

Q2 1989 69,850 peak

Q3 1989 69,659

Q4 1989 68,754

Q1 1990 69,103 spring bounce!

Q2 1990 68,980

Q3 1990 68,823

Q4 1990 68,895

Q1 1991 68,932 spring bounce!

Q2 1991 68,575

Q3 1991 67,807

Q4 1991 67,250

Q1 1992 65,882

Q2 1992 64,505

Q3 1992 63,926

Q4 1992 61,643

Q1 1993 61,662 spring bounce!

Q2 1993 62,321

Q3 1993 62,588

Q4 1993 62,868

Q1 1994 63,232 spring bounce!

Q2 1994 62,697

Q3 1994 62,636

Q4 1994 62,383

Q1 1995 62,340

Q2 1995 61,564

Q3 1995 61,115

Q4 1995 61,544

Q1 1996 62,453 spring bounce!

Q2 1996 63,880

Q3 1996 64,519

Q4 1996 66,094

Edited by grizzly bear

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All I remember from those years (re: 91-94ish) was pain and negative equity and no-one wanting to touch property but I guess those circumstances may have been a start for speculation by the right people in the same way that people now might consider 20/30% off peak a snap now.

Personally the numbers involved now are too crazy, back then you could get a midlands terrace for 13k, the 4 bed house a friend had in Finchley London for £100k.

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Guest มร หล&#3
here is halifax data: floor in 1995, and it wasn't a consistent path down.

Q2 1989 69,850 peak

Q3 1989 69,659

Q4 1989 68,754

Q1 1990 69,103 spring bounce!

Q2 1990 68,980

Q3 1990 68,823

Q4 1990 68,895

Q1 1991 68,932 spring bounce!

Q2 1991 68,575

Q3 1991 67,807

Q4 1991 67,250

Q1 1992 65,882

Q2 1992 64,505

Q3 1992 63,926

Q4 1992 61,643

Q1 1993 61,662 spring bounce!

Q2 1993 62,321

Q3 1993 62,588

Q4 1993 62,868

Q1 1994 63,232 spring bounce!

Q2 1994 62,697

Q3 1994 62,636

Q4 1994 62,383

Q1 1995 62,340

Q2 1995 61,564

Q3 1995 61,115

Q4 1995 61,544

Q1 1996 62,453 spring bounce!

Q2 1996 63,880

Q3 1996 64,519

Q4 1996 66,094

Residential land prices bottomed in 1993.

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HAMISH youre forgetting the elephant in the room: interest rates.

I assumed that was his wife. I had already offered her a drink and made suggestive comments about helping her find the lav for a knee trembler not to forget.

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:lol:

For all those so fond of quoting history...... That the last slump lasted for many years......

Why exactly is it that you don't mention that the bottom was reached the year after it started?????

An inconvenient truth indeed!!!!!!!!!!!!!!!!!!!!

Everyone points to the slump of 1991-95, where there continued to be frequent monthly falls well into 1995.

But the truth is the bottom was reached quite early in that cycle – to be precise, in November 1992

Oh dear..... I hadn't realised that until now. HPC bears have been trying to re-write history.

:lol::lol::lol::lol:

Yes I know, us silly bears. How daft of us to think that house prices should not continue to rise exponentially forever when wages are static or falling. It's our duty to buy into the dream, after all with such good life expectancy and employment prospects, paying the mortgage well into our 90s will be no problem at all. Silly bears indeed. :lol: I look forward to a rosy future of rapidly increasing house prices because it will once again be an indicator of how well the British economy is doing when compared to such unproductive backwaters as Germany with its ----gasp---- house price deflation and terrible economic performance. Why bother with productive enterprise when my house can be my income. :rolleyes:

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:lol:

For all those so fond of quoting history...... That the last slump lasted for many years......

Why exactly is it that you don't mention that the bottom was reached the year after it started?????

An inconvenient truth indeed!!!!!!!!!!!!!!!!!!!!

Everyone points to the slump of 1991-95, where there continued to be frequent monthly falls well into 1995.

But the truth is the bottom was reached quite early in that cycle – to be precise, in November 1992

Oh dear..... I hadn't realised that until now. HPC bears have been trying to re-write history.

:lol::lol::lol::lol:

According to Nationwide the real average house price fell 10.9% between Q2 1992 and Q4 1995.

Oh, of course we don't take inflation into account do we Hamish?

Good luck if you ever enter the investment world. I'm sure you'll trounce the opposition.

Edit: missed word.

Edited by FreeTrader

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Guest มร หล&#3
HAMISH youre forgetting the elephant in the room: interest rates.

The B@stard's right.

A gilts strike / UK default will force them way up (see modern day Iceland).

HP's only really started tumbling on rising IR's before. The artificially low 0.5% base rate won't hold. I believe the 50 year average was 7%, pre-lunacy.

They don't have to hit 15.5% now to have the same effect as before.

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The nominal monthly trough may have been in 1992, although the quartley bottom was in Q4 1995, and in real terms another 10% or so. And that in a far milder crash 18 months in.

It doesnt take a genius to figure inflation and more specifically wage inflation was a lot different in the period 1989-95 to what it will be in the period 2007-2013. If theres any wage inflation at all, that is.

A pretty disingenous article really, although as it says ...

This is not really in the script. Prices, having overshot on the way up, should overshoot on the way down. By any traditional measure of affordability, they have further to slide. Add in high levels of job insecurity and low levels of mortgages on offer and the scene seemed to be set for a continuation of the plunge of the past 18 months.

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:lol:

For all those so fond of quoting history...... That the last slump lasted for many years......

Why exactly is it that you don't mention that the bottom was reached the year after it started?????

An inconvenient truth indeed!!!!!!!!!!!!!!!!!!!!

Everyone points to the slump of 1991-95, where there continued to be frequent monthly falls well into 1995.

But the truth is the bottom was reached quite early in that cycle – to be precise, in November 1992

Oh dear..... I hadn't realised that until now. HPC bears have been trying to re-write history.

:lol::lol::lol::lol:

Hamish, many say you are an estate agent. If so, speak to your older colleagues. They will tell you that the last crash started in 1988.

But the real falls were mostly obscured by the high inflation of that time until the savage falls about 3 years later drove the collapse into nominal territory.

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Guest มร หล&#3
He's forgetting more than that:

+ Historical cycles

+ Valuations, currently far in excess of historical measures

+ Lack of transactional volume in this upswing

+ Unwillingness of banks to go back to the excess lending multiples of 2006-7

Are there not hundreds of thousands of empty properties in the UK? That must have an effect.

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