What If We've Been Wrong All Along.

[Guest Barebear]

When talking of HPC one of my hated bull phrases was ' they wont let that happen ". And they were right they didn't , they put our money where there mouth was and averted a collosal crash.

So the question is this, if you had known for sure with all the pumping of easy finance into the housing market that if it all went wrong the government would have stepped in and slashed interest rates to virtually nothing, would you ......

A/ Been a lot more bullish

B/ Considered BTL

C/ Still have taken the same stance on the grounds that too much debt is a bad thing.

I'm starting to think that we aint gonna see a massive collapse and if anything we'll be back up to 2007 levels by the election.

What happens when the tories get in ( if they do ) is another matter. My feeling is 5 years of stagnation with maybe small upward rises.

[IMHAL]

When talking of HPC one of my hated bull phrases was ' they wont let that happen ". And they were right they didn't , they put our money where there mouth was and averted a collosal crash.

So the question is this, if you had known for sure with all the pumping of easy finance into the housing market that if it all went wrong the government would have stepped in and slashed interest rates to virtually nothing, would you ......

A/ Been a lot more bullish

B/ Considered BTL

C/ Still have taken the same stance on the grounds that too much debt is a bad thing.

I'm starting to think that we aint gonna see a massive collapse and if anything we'll be back up to 2007 levels by the election.

What happens when the tories get in ( if they do ) is another matter. My feeling is 5 years of stagnation with maybe small upward rises.

D) Bought Gold - yep thats the one I would have chosen

When the tories get in I expect we will see a slow return to sounder money - albiet with inflation thrown in.

[Sybil13]

When talking of HPC one of my hated bull phrases was ' they wont let that happen ". And they were right they didn't , they put our money where there mouth was and averted a collosal crash.

So the question is this, if you had known for sure with all the pumping of easy finance into the housing market that if it all went wrong the government would have stepped in and slashed interest rates to virtually nothing, would you ......

A/ Been a lot more bullish

B/ Considered BTL

C/ Still have taken the same stance on the grounds that too much debt is a bad thing.

I'm starting to think that we aint gonna see a massive collapse and if anything we'll be back up to 2007 levels by the election.

What happens when the tories get in ( if they do ) is another matter. My feeling is 5 years of stagnation with maybe small upward rises.

Is it just possible we are at this stage of a bull trap,( see below), after all where will the money continue to come from to support house prices where they are where lenders ask for a 40% deposit and value properties under offer price because they do not want to take the much needed adjustment upon themselves ?

Fidelity's Anthony Bolton explained in the weekend's FT about the stock market, "if everyone is positioned for the market to rise, it means these bullish expectations are already discounted" – i.e. factored into the price. As a result, "the market often moves to make the majority wrong and does the unexpected… so at turning points especially, the correct is the minority view".

And while there are plenty of differences between shares and houses, the principles of crowd behaviour are the same for every asset class. When almost everyone is bullish, get ready for a price fall. The near-8.5% bounce in property prices within the last six months (using Nationwide's figures at least) now looks ripe for a reversal.

[51%deposit]

personally i can only see it going one of two ways, house prices come down or wages go up so much so that houses suddenly become affordable. Either way, houses have to become affordable, which they arnt.

the state where buying a house is wholly consuming, ie, you have to commit your entire life to achieving it, is ridiculous, and wrong.

[DrMartinSanchez]

Just watching a graph showing GBP v EUR.

For the lucky guys who switched their savings to Euros 2~3 years ago, there's a little fortune to be made.

[Guest Barebear]

I often wonder whether we are victims of our own success. Perhaps we were listened to when house prices were raging. Perhaps all our constant warnings of an impending crash didnt fall on deaf ears.

Perhaps we are the reason for the government intervention.

'' Look at all these savers with massive str funds all waiting for a crash ''

'' I know lets hammer the savers to prevent the crash "

[xux42]

the state where buying a house is wholly consuming, ie, you have to commit your entire life to achieving it, is ridiculous, and wrong.

Amen to that.

There was a stupid bint nurse on any answers this weekend who was complaining that she'd have wasted her time working 50 hours a week for 30 years striving for a house now worth over £1,000,000 if a property tax was levied in the future.

Got news for you love, you've wasted your life.

[57percent]

Agree with the above. The inflation has to get to wages, before house prices can stabilize.

Otherwise this is a bull trap.

I'm no longer saying this won't happen, but doesn't look likely for a while.

No-one (well me at least) expected them to slash IRs so low and double the narrow money supply.

They've made it clear that house prices are their main aim, so maybe the can pull it off.

My gut feeling is that they can't.

There a trigger in the short future that will change policy. They can only devalue the pound so far.

Edited September 28, 2009 by 57percent

[non frog]

Firstly, you are not wrong. However, with hindsight I would have tried harder to buy at the bottom of the bull trap - we nearly got a property then but the vendor pulled out. I would be selling it now.

I would have put the rest of the cash into shares at the bottom. I would be selling now.

I honestly thought things would move faster. Also the scale of intervention has been breathtaking. Brown has used the experience of the Japanese crash to an extent that few other people would have had the balls to do. International co-operation has been unprecedented, again something I could never have envisaged.

If, as expected, we enter a deflationary crash any time soon house prices in the UK will fall, as will the supply of credit to buy them. If the government over eggs the QE pudding the value of the pound will fall even further so UK assets will still fall by international standards. The UK will enter a new 1970s with strikes and rubbish in the street. Both political parties agree that they will cutback on spending adding further to the deflationary pressure ignoring the Japanese experience that this is a sure-fire way to crush the nascent recovery. The idiot pubic want this.

Nope, you are not wrong. House prices will fall in 2010. Maybe off a cliff, maybe just a fizzle - like Japan.

IMO its a bit early to be sure how things will go but I don't think there is much more that the UK government can do to prop up asset prices and avoid deflation and there is every sign is that the governments of the world want to return to la-la land where everything is working just fine.