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TheLittleGuy

Are We Really Heading For A Crash?

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I'm back after a severe crash on my PC. I know some of you will be delighted to see me!

I'm still unconvinced by the arguments for an impending collapse of the housing market. I just can't see why house prices should fall dramatically if the economy continues to be reasonably healthy. The following article in the Independent, by economist Diane Coyle, describes the state of play today as she sees it.

"Why doomsayers have got it wrong over the economy"

http://news.independent.co.uk/business/com...ticle305117.ece

She's a bit glib, but overall the article seems pretty realistic. A more bearish article from the FT has been mentioned several times already on this site. Although the headline is bearish, I think the most important statement to note is at the very end.

"House prices fall for fifth month"

http://news.ft.com/cms/s/07234096-0b18-11d...000e2511c8.html

Overall, activity appears to have recovered from a trough last November. Mortgage approvals by banks and building societies reached 96,000 in June, which is in line with the monthly average over the past 20 years.

Everything at the moment suggests that the economy and housing markets will decline but not bust. So really, are we heading for a house price crash?

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People have, quite understandably, been suggesting that stagnantion will result unless there is a sudden shock to cause nominal falls. Until recently that shock was not obvious (as most shocks aren't!). I now believe that oil is the trigger that will cause falls.

Oil = lack of growth and inflation = possible stagflation = house price falls.

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Guest struthitsruth
Overall, activity appears to have recovered from a trough last November. Mortgage approvals by banks and building societies reached 96,000 in June, which is in line with the monthly average over the past 20 years.

I've been wondering about those mortgage approval figures though. If the banks are approving mortgages for people MEWING and investing in Croatia, Bulgaria, Romania would those approvals be included in the 96,000 ??

<_<

Edited by struthitsruth

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You're in denial mate.

It's painfully obvious what's happening.

I'm in denial?!

Painfully obvious, is it? OK, let's see. Transactions have been increasing. IR's have just fallen. House prices overall have barely moved. Unemployment & inflation remain low, with little indication that these will worsen significantly in a hurry. Sentiment remains broadly positive.

I'm not saying house prices won't continue to fall, or that the market will recover. I'm saying that there's no reason for prices to fall quickly and that inflation will account for a lot of the price correction.

I've been wondering about those mortgage approval figures though.  If the banks are approving mortgages for people MEWING and investing in Croatia, Bulgaria, Romania would those approvals be included in the 96,000 ??

Nope, the increased mortgage numbers specifically exclude MEW. These are property purchase transactions.

People like her don't even know they've been brainwashed.  I studied economics at Oxford and was then trained further on Wall Street by a nobel prize-winning economist working for a prestigious investment bank.  But it wasn't until years later when I read Robert Prechter's "Conquer the Crash" that I first started to realise I had been fed propoganda (pardon the pun).

A wild generalisation, but I would say that no economist has ever predicted anything except steady growth, until a slump is underway.

Well there you might be right. :) Still, the facts don't support a crash prediction at the present time.

Edited by TheLittleGuy

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Read the last line of my signature.

I come on here (mostly) these days to assess where in the crash cycle we are and I suspect that we are much further down the line than is suggested in the media.

Time will tell - but there remains nothing in the pipeline to turn this market around.

Overpriced supply continues to increase and I expect substantial price falls to filter through over the coming months.

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Are We Really Heading For A Crash?, Or is it all just wishful thinking?

Yawn. For Gods' sake give it up. This must be the seventh thread you have started with EXACTLY the same title and arguments. You clearly believe what you believe, and most people on HPC disagree with you. End of story. Let it go.

Transactions have been increasing.

What was your evidence for this? I remember you posting it last time, and I remember thinking it was distinctly tenuous.

Unemployment & inflation remain low

http://au.biz.yahoo.com/050713/33/5yel.html

the increased mortgage numbers specifically exclude MEW. These are property purchase transactions.

But what they don't tell you is how many made it to completion. I would expect a large number of sales to fall through in this uncertain climate.

Edited by zzg113

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When Kirstie Alltripe predicts a further 50-60% rise in property prices over the next 5 years on top of the current bubble, which is the biggest ever, you know it's game over.

DAFT.

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Diane Coyle must have been a bit short of cash, so she got some work of her old company :ph34r: Well written article.

I work around manufacturing and my outlook for the industry is dire, although if I had a government/Civil Servant job possibly my outlook would be different?

From my position now, I see a lot of trouble ahead. House prices are way out from people's salary. Lots of redundancies (I mean proper Jobs going). Interest rates that only look, as they will go up in the long run.

I am fortunate not to have any debt, but I know many people who are expert Credit card balancers. I for one cannot live one paycheck away from financial disaster.

Everyone in Wales is complaining about new council tax rates, Fuel and utilities are going up.

Little guy keep up the good work, you are a Dying breed. ;)

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Guest consa
I'm back after a severe crash on my PC.

:lol: You poor thing!! what was it? the virus called: wnkr.verbalbllx.exe

I know some of you will be delighted to see me

Who is that then?

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When Kirstie Alltripe predicts a further 50-60% rise in property prices over the next 5 years on top of the current bubble, which is the biggest ever, you know it's game over.

DAFT.

Did she really say that? Bloody hell!

I reckon it'll be more like 70-80% myself.

Just kidding. Prices are falling, and they'll continue to go down. The only thing I dispute is how fast and how far.

Yawn. For Gods' sake give it up. This must be the seventh thread you have started with EXACTLY the same title and arguments. You clearly believe what you believe, and most people on HPC disagree with you. End of story. Let it go.

As you say, most people on HPC think there's an impending crash, and damn near everyone else disagrees. It's the intention of many here (to be fair, excluding yourself) that any view that contradicting the HPC articles of faith should be excluded as heresy.

I'll continue posting what seems to the factually supported position until someone here provides an incontravertable, unavoidable cause for prices to suddenly fall like a stone.

As for your comment regarding transaction levels, if it's good enough for the FT (see earlier quote) then surely it's good enough for you? The increase has now been widely reported. If you dispute the statement then please back up your argument with evidence.

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The article smacks of someone standing at the top of a cliff saying how great the view is whilst walking slowly forwards. I think the US is going to run into trouble pretty soon and so will almost everyone else. Already the EU is dead on its feet. Transaction volumes rising might be the 'spring bounce' that, er, didn't really happen.

Edited by Matt

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Guest Bart of Darkness
I'll continue posting what seems to the factually supported position until someone here provides an incontravertable, unavoidable cause for prices to suddenly fall like a stone.

No one is expecting prices to "suddenly fall like a stone".

The last HPC wasn't a sudden event, it took years to run its course.

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Guest consa

Ok little guy, read this!! let me know if you spot anything similar to the UK in it.

Japan bubble offers lessons

August 13, 2005 ㅡ TOKYO ― Japan's real estate "bubble" in the 1990s was exacerbated by over-eager lenders, and an irresolute and uncoordinated government response, three former and current Japanese government officials at the center of the crisis said 15 years after the bubble burst.

The three, including Representative Tamisuke Watanuki of the Liberal Democratic Party, who was serving as chief cabinet secretary director general of the Ministry of Construction in 1990, recently talked to the JoongAng Ilbo about what they did wrong, hoping to offer lessons for the current Korean government's fight against real estate speculation.

"Financial institutions were most to blame for the real estate bubble," said Mr. Watanuki. "Banks stimulated customer demand by saying, ‘Buy land, we will lend you money, you can only make money through real estate.'"

"Everyone knew that excessive liquidity was the problem, but no one could do anything about it," said Yoshikazu Fujiwara, president of Higashi Nihon Construction Guarantee, who worked for the National Land Agency in the early 1990s.

The Finance Ministry's regulations were ineffective, and by the time it decided to limit the amount of real estate-related loans in April 1990, it was too late, he said.

"The real estate bubble was about to burst."

Mr. Watanuki pointed out that contradictory policies among ministries worsened the situation. "When I was the head of the National Land Agency [in the late 1980s], we levied high taxes on capital gains made from short-term investments in real estate.

"But at that time the finance minister lowered interest rates by 0.25 percentage points and released about 6 trillion yen ($54.4 billion) on the market to cope with the high yen value."

Tax regulations were not effective either, according to Toshikazu Suto, an official in charge of land information at the Ministry of Land, Infrastructure and Transportation, who worked for the Construction Ministry in the early 1990s.

"We taxed capital gains based on actual trading prices by as much as 60 percent, but it was not effective," Mr. Suto said. "The government should have worked from the start to block money from flowing into the real estate market," he continued, "and that's what the Korean government should do now."

Mr. Suto also said real estate policies should be coupled with interest rate policies, adding that the Bank of Japan has admitted that it was wrong to lower interest rates at the height of the real estate bubble in 1990.

"The government should be clear about why it has to raise property taxes and how much of an increase is appropriate. Heavy taxes are not always the right answer. Also, the philosophy that the burden should be increased on people who have a lot of land and houses does not help," said Mr. Watanuki.

"Now I don't think that it's the government's place to decide land and housing prices. The government should allow prices to be set by supply and demand," he added.

"The bubble will burst someday for sure, so a soft landing is important. The Korean government must take into account the consequences of its actions when it is formulating policies," said Mr. Fujiwara.

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No one is expecting prices to "suddenly fall like a stone".

most of the sensible posters on this site go along with the theory the "crash" will take several years to bottom out - falls of 1% per month for 3 years is nearly 40% off todays crazy prices !

Just like the debt junkies, you seem to want everything today instead of having to wait. Do you also suffer from premature ejaculation ??

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most of the sensible posters on this site go along with the theory the "crash" will take several years to bottom out - falls of 1% per month for 3 years is nearly 40% off todays crazy prices !

Just like the debt junkies, you seem to want everything today instead of having to wait. Do you also suffer from premature ejaculation ??

1) I don't know who you're addressing - me or Bart.

2) Neither Bart nor I said we wanted or expected "everything today".

3) -10%+ pa IS falling like a stone. I'm thinking more like -0.2% pcm over a longer term.

4) Do you suffer from some a rude, narrow mind?

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Please Guys, don't shoot me down for this, but this little guy does have a point.

I was convinced that this bubble was going to be pricked last year and that falls would have been far greater by now.

I really do not understand how this property market is holding up, i suppose now that we have gone another year, that is another year where debts have been building up even more.

I think that little guy is right in a way, but i am hoping that this crash is just been put off by the VI'S, but i do not know how they are doing it.

Sam

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Please Guys, don't shoot me down for this, but this little guy does have a point.

I was convinced that this bubble was going to be pricked last year and  that falls would have been far greater by now.

I really do not understand how this property market is holding up, i suppose now that we have gone another year, that is another year where debts have been building up even more.

I think that little guy is right in a way, but i am hoping that this crash is just been put off by the VI'S, but i do not know how they are doing it.

Sam

Get Him!

:D

Thing i like about TLG's posts is that they are consistant, he has researched for himself and came to a conclusion himself, i dont personally agree that we need a massive economic shock to start it all off, but thats irrelevant really. He is not one of the sheeple. So i will quite happily take on board his point of view.

Right or wrong TLG stick to your guns if thats what you believe.

Now carry on folks - take him apart.

:)

Edited by theChuz

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As for your comment regarding transaction levels, if it's good enough for the FT (see earlier quote) then surely it's good enough for you? The increase has now been widely reported.

Where in the FT article does it say that there has been an increase in transaction volumes???

http://news.ft.com/cms/s/07234096-0b18-11d...000e2511c8.html

The figures, compiled by the consultancy Acadametrics, highlight the stagnant nature of the British housing market this year. On almost every measure, house prices have remained flat while the number of transactions has stabilised close to normal levels.

Gary Styles, chief economist of Acadametrics, said: “Over the last five months house prices have continued to show modest falls. Although some regions showed signs of stabilising in the first quarter, prices are now beginning to ease further in most regions.”

“Lower transaction volumes and concern about the slowing economy has affected consumer confidence.

Clearly they are suggesting that last year's transaction numbers were "abnormal" and the falls which we have seen are merely bringing them back to "normal" levels (whatever that is). By no stretch of the imagination are they implying that transactions have increased.

Edited by zzg113

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me2,good post.

if you are indeed as learned as you state then you know full well that sentiment is a key driver in these markets....and as a whole,US and UK economies have followed a "two steps forward,one step back" trajectory for some time....so th HPC will actually be helpful!!!

for the US it gives the opportunity to weaken the dollar and inflate away the defecit,for us it gives the opportunity to weaken sterling and bugger the Eurozone,giving us more control!!....pretty simple!

if Euro strengthens,their exports(which is most of france and germany)will be hit hard,and as we weaken against dollar we will benefit!

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Guest Time 2 raise Interest Rates
I'm back after a severe crash on my PC. I know some of you will be delighted to see me!

I'm still unconvinced by the arguments for an impending collapse of the housing market. I just can't see why house prices should fall dramatically if the economy continues to be reasonably healthy. The following article in the Independent, by economist Diane Coyle, describes the state of play today as she sees it.

"Why doomsayers have got it wrong over the economy"

http://news.independent.co.uk/business/com...ticle305117.ece

She's a bit glib, but overall the article seems pretty realistic. A more bearish article from the FT has been mentioned several times already on this site. Although the headline is bearish, I think the most important statement to note is at the very end.

"House prices fall for fifth month"

http://news.ft.com/cms/s/07234096-0b18-11d...000e2511c8.html

Everything at the moment suggests that the economy and housing markets will decline but not bust. So really, are we heading for a house price crash?

You're still not convinced by the arguments for the impending crash of the housing market. Is that why you sold to rent? And why you think the housing market's gonna gently slow, but also crash? Do yourself a favour and change your therapist. You're not getting value for money.

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Lordy. Some people post a zillion graphs of the girth of their k80b vs wages vs house prices, talk about the economics of Japan. If they were that good at economics they should be millionaires already and should be sunning themselves on a carribean island. Suprisingly they are not and their plumber is!! :lol:

Talk is cheap.

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Lordy. Some people post a zillion graphs of the girth of their k80b vs wages vs house prices, talk about the economics of Japan. If they were that good at economics they should be millionaires already and should be sunning themselves on a carribean island. Suprisingly they are not and their plumber is!! :lol:

Talk is cheap.

Dont underestimate some of the minds that post here. Some of the folks have got quite large wallets too. You never quite know exatcly who your talking to on here, so its prolly best not to make to many asumptions. :)

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  • 301 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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