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Uk House Prices 'to Slump As Credit Crunch Returns'


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This is your response to a well thought out post? I wouldn't bother next time.

I said the recovery will be underway in 2011....not by 2011.....in 2011 :) It could well be the last quarter....but imo it will be started within that year.

The growth will come from exports and services thanks to a low pound. Rates will remain low. Savers will be forced to spend or watch what cash they have evaporate. Wages will start to rise. through all this inflation will be rampant, the figures will be fudged to disguise it best they can. Property will still be your best bet.

Once out the other side hopefully guys like you will be flat on their ****! B)

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Well, nobody said it would be easy..... some advice? get yourself someBricks and Mortar :D

Look, I already own houses abroad, with no mortgage on them, so that's not the real itch for me.

And I actually come here to also hear some validated or credible contrarian opinion (I'm a perma-bear myself). Yours sound like a press release from Assetz.

Must try harder.

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snip....

People borrow money to spend on goods and services - SNAP

snip

Houses are not a consumer good. They are not "consumed". The purchase of one from another buyer does not show in GDP. As long as you live in it yourself the "return on assets" also does not show in GDP snip

loan interest is the "Product" bankers make and does show up in GDP. commissions to EAs, fees to lawyers and stamp duty will all be part of the GDP formula.

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I would not say well thought out, as there are a number of flaws. you keep telling yourself that though. :lol:

My point is that you said:

Once out the other side hopefully guys like you will be flat on their ****!

You don't have to be rude just becase you don't agree with someone. That just means you don't have the intellegence or imagination to come back with a thought out response.

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What issues have they resolved since the onset of the 07 credit crunch?

I am interested to know where your optimism is coming from because I can only see actions that have added to our future problems not resolved them?

Exactly, I had this thought the other day.

Exactly what has been fixed since 2007? what has changed? the banking system nearly failed, we were hours from ATM's being shut down, there was a run on NR and it collapsed.

So what has printing all that money and cutting rates to zero fixed exactly? which of the fundamental problems that caused the banking system to collapse have been fixed?

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My point is that you said:

You don't have to be rude just becase you don't agree with someone. That just means you don't have the intellegence or imagination to come back with a thought out response.

People will mock that which they fear, in the hope that mocking will somehow make it not true.

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The growth will come from exports and services thanks to a low pound.

The only export that seems to be growing at the moment is our export of cash and this is in return for an import of services... I'm not sure we will have much left to export in 2011?

sugarflux

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Two points;

1. This will not begin until 2011 and probably not in full flight until 2014 - how much rent will you pay in the next 4 years waiting for these prices to fall?

2. Blanchflower, who often writes for the Telegraph this morning, was talking on Fivelive this morning about the CPI figure being higher - nearer 4% - to take into account house inflation.

Yes, that is closing the door after the door is bolted but if that happened now then the result would be to keep IRs low - he even talked about IRs being negative - which would prop up house prices. The journo questioned about that punishing the prudent/thrifty and rewarding those who took on debt but the gist seemed to be to inflate away the debt - so watch out STRers.

Good post MT as always. People seem to forget that as real inflation roars away even if prices stay they same they are going down.

Personally if you take a standstill as from 2007 -2014 thats long enough Christ you are in IT MT, How long do these people want!

I think there will be wage pressure soon especially in our industry so the inflation machine will be in full operation. You can't just printy printy and have shedloads more paper chasing the same goods and services without that happening.

So your final 4 words are spot on which was I bought a house.

Edited by Greg Bowman
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Good post MT as always. People seem to forget that as real inflation roars away even if prices stay they same they are going down.

Personally if you take a standstill as from 2007 -2014 thats long enough Christ you are in IT MT, How long do these people want!

I think there will be wage pressure soon especially in our industry so the inflation machine will be in full operation. You can't just printy printy and have shedloads more paper chasing the same goods and services without that happening.

So your final 4 words are spot on which was I bought a house.

its wages that are the key.

rising prices and static wages means less is spent in the economy on non essentials....and that means that loans for housing get more expensive which means that new entrants are excluded because even using affordability criteria...the loans cant be afforded. a wall is hit.

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Once out the other side hopefully guys like you will be flat on their ****! B)

And here we have what 13 years of a Labour government has given us.

Labour want the prudent and the sensible on their knees, they want all their hard work and saving wiped away.

Labour want the reckless and the greedy to succeed.

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Um....... look, don't get me wrong. I'm a bear. I agree the market will drop. I disagree with the poster you are arguing with who seems to beleive a recovery is in the immediate offing BUT........

Your logical chain breaks at.....

People borrow money to spend on goods and services - SNAP

People borrowed money to spend on houses. A large proportion, in fact possibly almost all of that debt increase, was caused by increased borrowing to spend on houses (you may remember that house prices went up quite a bit since 1997 so quite a few people had to borrow quite a lot to buy them).

Houses are not a consumer good. They are not "consumed". The purchase of one from another buyer does not show in GDP. As long as you live in it yourself the "return on assets" also does not show in GDP (i.e. if you pay rent to a landlord, it shows.... if you effectively rent from yourself it doesn't).

So...... yes our debt went up massively........ but, no....... it didn't show up in GDP as the figures you are suggesting, not even close. Our GDP was not "falsely inflated" by people buying a house off another home owner for 200k instead of 100k. The effect on our GDP would be a small-ish fraction of the 2-3% you suggested with crude manipulations of the figures.

Well, no...... but carry on anyway.........

I thought about that long and hard before coming to the conclusion that the £78 billion borrowed each year finds its way into GDP.

Of course a good chunk of it is borrowed as mortgages.

But there are other factors to consider.

When a first time buyer takes on say a £100k mortgage, someone at the top of a property chain walks away jangling several hundred thousand pounds in their pockets - some of which they will spend - holiday of a lifetime, new car ... who knows? The money that the person at a top of a property chain walks away with is the sum of the borrowing taken on by the people in the chain plus the deposit paid by the person at the bottom.

Some mortgage spending is MEW and is spent paying down credit card debts or on consumer goods.

And, of course, how many times is a borrowed £1 spent? If I borrow a pound and buy a newspaper - the shopkeeper pays wages to his staff (who spend them) and makes a profit (which he spends) and the newspaper owners the same ... and some of the money spent finds its way to the government as tax and it spends this ... how much of this recirculation of the same money is measured in GDP?

These things are impossible to nail down. So we have to look at things in a more general way.

  • Consumers borrow £78 billion a year .... Economy grows by 2% to 3% a year.
  • Consumers borrow nothing ... Economy shrinks by 2% to 3% a year
  • Government borrows and spends £178 billion a year ... economy static.

I cant' see how you can interpret it any other way.

Edited by Let's get it right
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And here we have what 13 years of a Labour government has given us.

Labour want the prudent and the sensible on their knees, they want all their hard work and saving wiped away.

Labour want the reckless and the greedy to succeed.

Well done Pete. Your powers of observation never cease to amaze me. Gordo would be pwoud of you son.

I think you meant to say...labour want he who dares to succeed.

Edited by Jister1
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Excellently put. Those few bullet points tell you exactly what is happening and should be pinned somewhere.

I concur.

But I sceptical that the banks intend to repay anything. This is all part of the PR softening up exercise for the banks to "get out of jail free." Wall Street are already working hard on Capitol Hill, so the same process will be occurring here. Of course it will be spun as a victory for "hard working families" as more funds will be available for mortgages. They have a gun held at the governments head.

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Good post MT as always. People seem to forget that as real inflation roars away even if prices stay they same they are going down.

Personally if you take a standstill as from 2007 -2014 thats long enough Christ you are in IT MT, How long do these people want!

I think there will be wage pressure soon especially in our industry so the inflation machine will be in full operation. You can't just printy printy and have shedloads more paper chasing the same goods and services without that happening.

So your final 4 words are spot on which was I bought a house.

Interesting phrase 'wage pressure'.

Not anywhere in my sphere. The only people who think they might get their wages up are people in the public sector with strong unions.

The rest of us realise that hoping for a wage increase at the moment is a pipedream. Lots of people are taking wage cuts, or are happy to have no increase but to keep their jobs.

I guess if you've (part) bought a house, you are praying for inflation to inflate away the debt.

When we are in a situation where:

Tax rises will happen

Government spending will be slashed

Interest rates will (sooner or later) go up

The pound will rise making our exports less competitive

I'm blowed if I can see where the wage pressure will come from. We will be in recession / verge of recession for a long time. Just saying that you need more money because you're paying more interest on your mortgage or paying more tax or are out of work because spending has been slashed - doesn't mean you will get it.

Edited by Let's get it right
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I think there will be wage pressure soon especially in our industry so the inflation machine will be in full operation. You can't just printy printy and have shedloads more paper chasing the same goods and services without that happening.

All the printing does is devalue the pound, making all the food, energy and consumer goods we import more expensive. A rise in the cost of imports will cause retail price inflation 0 how will it get me a pay rise?

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Interesting phrase 'wage pressure'.

Not anywhere in my sphere. The only people who think they might get their wages up are people in the public sector with strong unions.

The rest of us realise that hoping for a wage increase at the moment is a pipedream. Lots of people are taking wage cuts, or are happy to have no increase but to keep their jobs.

The only place where it will occur is in mid sized businesses where you intend to make a good living. i.e we run mid sized and large managed service contracts. We are lean and always have been. If a senior site guy wants another 5k a year and the client loves him and will resign you give him the 5k - you remember the conversation but you give him the 5k on a GP of 40% on a £200k contract affects your margin 2.5% not going to kill you.

The alternative is to go through all the ag of hiring - Our industry can be a little more meritocratic than you think. Could be a London midsized company thing.

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All the printing does is devalue the pound, making all the food, energy and consumer goods we import more expensive. A rise in the cost of imports will cause retail price inflation 0 how will it get me a pay rise?

By being worth something to your employer that is more than the year before (either commercially or technically) see the above post. Simple. Never believed in annual pay rises anyway.

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By being worth something to your employer that is more than the year before (either commercially or technically) see the above post. Simple. Never believed in annual pay rises anyway.

rising costs at purchase DO NOT mean auto rising prices at the sales end. Customers could be priced out or just buy an alternative.

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Interesting phrase 'wage pressure'.

Not anywhere in my sphere. The only people who think they might get their wages up are people in the public sector with strong unions.

The rest of us realise that hoping for a wage increase at the moment is a pipedream. Lots of people are taking wage cuts, or are happy to have no increase but to keep their jobs.

I heard a radio 4 report yesterday morning that was talking about 1 in 4 companies considering redundancies- it also said the 1 in 10 are intending to outsource more.

This is the point where having a 'flexible' labour market becomes a liability, since that 'flexibility' was a euphemism for lack of leverage on the labour side of the equation- the fact that people now need wage rises does not alter the fact that they have no way to enforce wage rises, especially in a high unemployment scenario where rocking the boat will be seen as a dangerous thing to do.

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I said the recovery will be underway in 2011....not by 2011.....in 2011 smile.gif It could well be the last quarter....but imo it will be started within that year.

The growth will come from exports and services thanks to a low pound. Rates will remain low. Savers will be forced to spend or watch what cash they have evaporate. Wages will start to rise. through all this inflation will be rampant, the figures will be fudged to disguise it best they can. Property will still be your best bet.

Once out the other side hopefully guys like you will be flat on their ****! cool.gif

You can have your beliefs - we all can. But some of us like to think things through and base our conclusions on something other than sheer hope - or whatever it is that drives you.

You haven't addressed anything I pointed out.

I'll try again for the sheer hell of it.

After the election:

Government spending will be slashed

taxes will go up (not heard the 20% VAT stories - they will come true - income tax will go up too)

interest rates will rise (we're not far off Greece on the debt front and they are paying 7% to borrow - our turn will come - soon)

Yet you say growth will come from exports due to a low pound.

Well, with interest rates at 0.5% it can't get much lower. Not much of a boom in exports at the moment because the rest of the world is on its bottom too. When interest rates rise, our exports will get more expensive.

Savers will be forced to spend ... really! Lots of people will be miserable that their savings are not earning much interest but, in a hostile world of government spending cuts, tax rises and rising unemployment - people are going to hoard their money like never before.

The fact is the growth in the economy between 1997 and 2007 was based on debt - now that debt is out of the equation we have no growth. When the government starts paying down the debt - the only logical conclusion is negative growth.

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I heard a radio 4 report yesterday morning that was talking about 1 in 4 companies considering redundancies- it also said the 1 in 10 are intending to outsource more.

This is the point where having a 'flexible' labour market becomes a liability, since that 'flexibility' was a euphemism for lack of leverage on the labour side of the equation- the fact that people now need wage rises does not alter the fact that they have no way to enforce wage rises, especially in a high unemployment scenario where rocking the boat will be seen as a dangerous thing to do.

Well said.

And it's been like this for a lot of people for some years now. Look at what bus drivers earn. Same as they did 15 years ago. Postmen the same.

Yet some people think that in 2011 (possibly last quarter, can't be too sure, might be around Christmas, definitely before midnight on New Year's Eve) we're going into an export driven recovery. Ha, ha! You have to smile.

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Hell hath no fury like the consequences of a house price crash delayed by a desperate politician attempting to save his own skin at any cost.

Another 30-40% down yet to come.

That's not particularly realist, RB... more like 50-60% down from where we are here :P

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  • 439 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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