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Uk House Prices Will Plummet: Look At This Scary Chart

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Warning to all prospective buyers:

UK house prices will plummet: look at this scary chart

"Except for a brief period in 1973, relative to stocks, UK houses are as expensive as they've ever been. That chart is telling you to sell houses and buy equities. It currently takes just under 40 FTSE points to buy the average UK home, a level not seen since 1980. We can expect that chart to move back to 20, or even to the longer-term mean of around 10. "

........

"Prospective buyers must realise that interest rates are being held at artificially low levels. What happens to house prices when rates are forced up, as they inevitably will be? What then? What happens to all those who are on the brink now, but just surviving? What happens to those on tracker rates, who haven't yet felt the crunch because their monthly repayments have fallen so low? What happens to first time buyers and buy-to-let landlords in a high-interest-rate environment? That is when we get Rodrigue's 'capitulation'.

House prices remain out of kilter with what people earn. No matter what the government does, they will head lower until they reach a level which people can afford, which history has shown to be about three times earnings. And they will probably overshoot this to the downside because of the scale of the preceding boom and the oncoming bust. There is nothing anyone, not tycoon nor politician, can do to stop this inevitable course. All they can do is delay it. "

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This is the same as the house prices versus wages issue.

Houses are still too expensive.

The market always over compensates.

3x wages is affordable.

Prices should drop to 2.5xwages before recovery.

Expect 70% drops from peak.

Mathematics does not negotiate.

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The government is playing a VERY DANGEROUS game trying to go against the corrective market forces in this cyclical house price crash.

Brown needs to go before we have issues even bigger than buying a cheap house.

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The government is playing a VERY DANGEROUS game trying to go against the corrective market forces in this cyclical house price crash.

Brown needs to go before we have issues even bigger than buying a cheap house.

Yes, as the (other) fella says, the real crisis is the government intervention.

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"Except for a brief period in 1973, relative to stocks, UK houses are as expensive as they've ever been. That chart is telling you to sell houses and buy equities. It currently takes just under 40 FTSE points to buy the average UK home, a level not seen since 1980. We can expect that chart to move back to 20, or even to the longer-term mean of around 10. "

Surely you only buy equities if you expect medium-term economic growth, irrespective of the housing market?

Also hasn't the FTSE100 only been going since 1984???

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Surely you only buy equities if you expect medium-term economic growth, irrespective of the housing market?

Also hasn't the FTSE100 only been going since 1984???

I agree with you. Even stocks are very risky. This credit contraction cannot be halted no matter how much money they throw at failing banks/corporations/individuals. They will only weaken the productive parts of the economy resulting in a far worse recession and possibly a depression.

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Warning to all prospective buyers:

UK house prices will plummet: look at this scary chart

"Except for a brief period in 1973, relative to stocks, UK houses are as expensive as they've ever been. That chart is telling you to sell houses and buy equities. It currently takes just under 40 FTSE points to buy the average UK home, a level not seen since 1980. We can expect that chart to move back to 20, or even to the longer-term mean of around 10. "

........

"Prospective buyers must realise that interest rates are being held at artificially low levels. What happens to house prices when rates are forced up, as they inevitably will be? What then? What happens to all those who are on the brink now, but just surviving? What happens to those on tracker rates, who haven't yet felt the crunch because their monthly repayments have fallen so low? What happens to first time buyers and buy-to-let landlords in a high-interest-rate environment? That is when we get Rodrigue's 'capitulation'.

House prices remain out of kilter with what people earn. No matter what the government does, they will head lower until they reach a level which people can afford, which history has shown to be about three times earnings. And they will probably overshoot this to the downside because of the scale of the preceding boom and the oncoming bust. There is nothing anyone, not tycoon nor politician, can do to stop this inevitable course. All they can do is delay it. "

Wow, what a insightful article - it's almost as if he went to a drinks party, heard someone make a comment, found a graph, and wrote a story to fit it. It's then dutifully truddled out on this sight to keep the faith. It's like listening to Rangers fans on the terracing

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Clearly, you didnt understand a word - Are you illiterate when it comes to charts and cross market relationships?

If so, I suggest you listen to the EA's and those ramping property in the media. Join their bandwagon, lever up and buy. It may be the only way you will learn

I clearly don't understand a thing Dr Bubb - you'll need to educate me ;)

What's you ROCE in the past 12 months ?

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ahhh yes - good old money week. Telling us how Long John Silver would of bought a house with peices of eight.

Id be mighty annoyed if id sold my house when MSW was advising it in 2004. Missed out on a 30% upleg before the correction. If you keep saying something long enough you are bound to be right sooner or later. Even a broken clock is right twice a day.

Edited by Gideon Gono

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ahhh yes - good old money week. Telling us how long John siliver would of bought a house with peices of eight.

Id be mighty annoyed if id sold my house when MSW was advising it in 2004. Missed out on a 30% upleg before the crash. If you keep saying something long enough you are bound to be right sooner or later. Even a broken clock is right twice a day.

lol

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I owned 1 house in the UK in 2001.

Now, I own 9x Properties in HK, after selling 1 (with 2 more sales to complete)

Plus, I have a portfolio worth 7-figures in Pounds, and maybe 3x that original property.

Chart-reading, and independent-thinking analysis were a big part of this.

All that came from One UK property in 2001. And I have had no salary since well before 2000.

What sort of Return do you think that represents?

How about YOUR returns?

As it happens, the writer of that article sold his Uk property and put the proceeds in Gold.

Here's an idea of how he has performed:

1244349742064563700.jpg

I think that the mudslingers here, who show their ignorance of what makes a good trading strategy

with every single post, have an enormous amount to learn.

I like what you write but isn't that graph 'Silver'? :P

A nice metal but just a tad different.

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UK property market has had 3 fundamentals IMO

1 Baby boomer demand

2 Tax incentives - exempt from capital gains tax, mortgage tax relief subsidy

3 Supply increasingly restrained by planning restrictions

These factors have combined to produce a 50 year boom in house prices with 18 year cycle of boom and bust superimposed on this long term trend. The general population now has a profound belief that property is a good long term investment the ultimate buy and hold investment that has crashes every other decade but gains value in the longer term.

This paradigm will take time to break - most people think property will be more valuable in 20 years time and see this like the last crash as just a temporary albeit a possibly decade long blip in a real winner long term investment.

I see

Baby boomer demand will collapse - the next generation will not have the numbers or wealth to bid up property higher than it is now - ever.

Credit - we have just had a credit peak - it is most unlikely that credit will be as freely available in the next few decades as it has been in the first decade of this century.

Tax incentives are a one off factor they cannot increase and will likely reduce

Planning restrictions cannot get much tighter.

In short property is now going to have a long term trend of falling prices for at least 40 years , you may make money by timing the 18 year cycle but overall it will be a losing investment and will be so for decades.

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UK property market has had 3 fundamentals IMO

1 Baby boomer demand

2 Tax incentives - exempt from capital gains tax, mortgage tax relief subsidy

3 Supply increasingly restrained by planning restrictions

These factors have combined to produce a 50 year boom in house prices with 18 year cycle of boom and bust superimposed on this long term trend. The general population now has a profound belief that property is a good long term investment the ultimate buy and hold investment that has crashes every other decade but gains value in the longer term.

This paradigm will take time to break - most people think property will be more valuable in 20 years time and see this like the last crash as just a temporary albeit a possibly decade long blip in a real winner long term investment.

I see

Baby boomer demand will collapse - the next generation will not have the numbers or wealth to bid up property higher than it is now - ever.

Credit - we have just had a credit peak - it is most unlikely that credit will be as freely available in the next few decades as it has been in the first decade of this century.

Tax incentives are a one off factor they cannot increase and will likely reduce

Planning restrictions cannot get much tighter.

In short property is now going to have a long term trend of falling prices for at least 40 years , you may make money by timing the 18 year cycle but overall it will be a losing investment and will be so for decades.

100% agree. good post

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Good stuff DrBubb and Compounded.

Its a pity most of the general public are oblivious to what is really going on.

I've learnt a lot from HPC.co.uk and GEI.

Those who don't take heed, well this gif sums it up:

4xmzj86.gif

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Warning to all prospective buyers:

UK house prices will plummet: look at this scary chart

"Except for a brief period in 1973, relative to stocks, UK houses are as expensive as they've ever been. That chart is telling you to sell houses and buy equities. It currently takes just under 40 FTSE points to buy the average UK home, a level not seen since 1980. We can expect that chart to move back to 20, or even to the longer-term mean of around 10. "

........

"Prospective buyers must realise that interest rates are being held at artificially low levels. What happens to house prices when rates are forced up, as they inevitably will be? What then? What happens to all those who are on the brink now, but just surviving? What happens to those on tracker rates, who haven't yet felt the crunch because their monthly repayments have fallen so low? What happens to first time buyers and buy-to-let landlords in a high-interest-rate environment? That is when we get Rodrigue's 'capitulation'.

House prices remain out of kilter with what people earn. No matter what the government does, they will head lower until they reach a level which people can afford, which history has shown to be about three times earnings. And they will probably overshoot this to the downside because of the scale of the preceding boom and the oncoming bust. There is nothing anyone, not tycoon nor politician, can do to stop this inevitable course. All they can do is delay it. "

Thanks OP, lovely Bear Food.

I'm keeping a list of those who are buying in now and chuckling as they try and justify thier mistake on this forum. What surprises me is that they still visit and post, proving that they have fallen into the Bull Trap, hook line and sinker. They have obviousley learnt nothing from this site and believe they are being clever.

Time will tell :lol:

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Wow, what a insightful article - it's almost as if he went to a drinks party, heard someone make a comment, found a graph, and wrote a story to fit it. It's then dutifully truddled out on this sight to keep the faith. It's like listening to Rangers fans on the terracing

Its a site not a sight.

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Warning to all prospective buyers:

UK house prices will plummet: look at this scary chart

"Except for a brief period in 1973, relative to stocks, UK houses are as expensive as they've ever been. That chart is telling you to sell houses and buy equities. It currently takes just under 40 FTSE points to buy the average UK home, a level not seen since 1980. We can expect that chart to move back to 20, or even to the longer-term mean of around 10. "

........

"Prospective buyers must realise that interest rates are being held at artificially low levels. What happens to house prices when rates are forced up, as they inevitably will be? What then? What happens to all those who are on the brink now, but just surviving? What happens to those on tracker rates, who haven't yet felt the crunch because their monthly repayments have fallen so low? What happens to first time buyers and buy-to-let landlords in a high-interest-rate environment? That is when we get Rodrigue's 'capitulation'.

House prices remain out of kilter with what people earn. No matter what the government does, they will head lower until they reach a level which people can afford, which history has shown to be about three times earnings. And they will probably overshoot this to the downside because of the scale of the preceding boom and the oncoming bust. There is nothing anyone, not tycoon nor politician, can do to stop this inevitable course. All they can do is delay it. "

Whoooooooo. It's the scary graph again.

Who is that fud?

Is he aware that this graph has been around for some time now and is theoretical.

Please, someone put the 'graph' to bed. some on here treat it as some biblical prophecy beyond reproach, it's embarrasing.

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I have enough money to buy a 2 bedroom house outright at this moment but being a greedy type I want to buy a house at a knockdown price so I have more money to spend on holidays, new car....etc. I will review again in October to see how much they have gone down. If not to my satisafction I will carry on waiting until they are sensible/good value for money.

I couldn't give two shit*s about the ******** being spouted about houses going up last month or so. The only indicator I use is unemployment statistics. If unemployment goes up houses prices will go down. Simple but that is all there is too it.

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I owned 1 house in the UK in 2001.

Now, I own 9x Properties in HK, after selling 1 (with 2 more sales to complete)

Plus, I have a portfolio worth 7-figures in Pounds, and maybe 3x that original property.

Chart-reading, and independent-thinking analysis were a big part of this.

All that came from One UK property in 2001. And I have had no salary since well before 2000.

What sort of Return do you think that represents?

How about YOUR returns?

As it happens, the writer of that article sold his Uk property and put the proceeds in Gold.

Here's an idea of how he has performed:

1244349742064563700.jpg

I think that the mudslingers here, who show their ignorance of what makes a good trading strategy

with every single post, have an enormous amount to learn.

Don't gloat Bubb. Someone of your calibre doesn't need to shout.

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