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LuckyOne

The End Is Near .......

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One sign of a market top occurs when natural buyers are scarce and agents in the marketplace try to create new demand.

The fact that an EA is promoting an investment fund to buy property in London and the SE is a sure signal that there are few natural buyers left.

It will be interesting to see how the fear / greed equation works in this case. They are predicting 32% cumulative gains over 2 years and 61% cumulative gains over 5 years.

I have always though that asset managers are there to generate fees for managers rather than returns for investors.

The "blurb" isn't clear on fees and how they are split between the managers and the promoters (the EA) but I suppose that the structure makes sense for the EA as they have a captive pool of "assets" for sale and will probably earn a lot more in total fees for less work than from simply finding houses for sale and then selling them.

The EA is taking a lot of reputational risk with this structure though. If investors lose out, the mantra that house prices only ever rise could finally be put to rest with a lot of long term consequences for the "industry".

http://www.uknanofunds.co.uk/

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One sign of a market top occurs when natural buyers are scarce and agents in the marketplace try to create new demand.

The fact that an EA is promoting an investment fund to buy property in London and the SE is a sure signal that there are few natural buyers left.

It will be interesting to see how the fear / greed equation works in this case. They are predicting 32% cumulative gains over 2 years and 61% cumulative gains over 5 years.

I have always though that asset managers are there to generate fees for managers rather than returns for investors.

The "blurb" isn't clear on fees and how they are split between the managers and the promoters (the EA) but I suppose that the structure makes sense for the EA as they have a captive pool of "assets" for sale and will probably earn a lot more in total fees for less work than from simply finding houses for sale and then selling them.

The EA is taking a lot of reputational risk with this structure though. If investors lose out, the mantra that house prices only ever rise could finally be put to rest with a lot of long term consequences for the "industry".

http://www.uknanofunds.co.uk/

Sheeple, especially older ones, know that house prices can fall, they just conveniently "forget" because the lure of free money is too intoxicating, IMO the collective memory about falls is being stimulated about now. The Tories being back at the levers of power will help many with their recollections I think laugh.gif

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Funny, this. Exactly the same thing happened ca 1989/90 in the classic car market. In the 80s it was the best investment going for several years running, not least because there's no CGT on cars (now where have we heard that one!). Everyone made money, pretty much, as everything went up. Towards the end an investment scheme was set up selling £25k shares in a portfolio of carefully selected (yeah right) classic cars so that "investors" could be "exposed" to all the benefits without having to garage, insure, etc the damn things. Just sit back and watch the money roll in. By 1990 virtually all the demand was from credit-fuelled speculators, none of whom wanted to be left holding the parcel when the music stopped.

Only it didn't work as they hoped. Things like E type Jags and some models of Ferraris fell by 70-80%. Area I know best, the prices didn't recover in nominal terms until about 2003.

Edited by munro

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Funny, this. Exactly the same thing happened ca 1989/90 in the classic car market. In the 80s it was the best investment going for several years running, not least because there's no CGT on cars (now where have we heard that one!). Everyone made money, pretty much, as everything went up. Towards the end an investment scheme was set up selling £25k shares in a portfolio of carefully selected (yeah right) classic cars so that "investors" could be "exposed" to all the benefits without having to garage, insure, etc the damn things. Just sit back and watch the money roll in. By 1990 virtually all the demand was from credit-fuelled speculators, none of whom wanted to be left holding the parcel when the music stopped.

Only it didn't work as they hoped. Things like E type Jags and some models of Ferraris fell by 70-80%. Area I know best, the prices didn't recover in nominal terms until about 2003.

I remember this too. I think that the Jag XJ220 was the poster child for this problem. People put down deposits in the later 80s / very early 90s expecting huge specualtive gains. By the time cars started rolling off the production line, Jag had a hard time enforcing agreed sales.

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That kind of investment could be viewed as a hedge, for those of us who have funds but not property. The two-year one is even (IMHO) ethically acceptable, as it's about new production rather than just seeking to profiteer in a zero-sum game.

Hmmmm .....

.... nah :o

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"The fund will return 15% per annum over a two year period."

Yeh, right. What a load of cockwash. :D

That was my first thought too.

The amount of risk required to earn 15% per year for two years is huge.

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That was my first thought too.

The amount of risk required to earn 15% per year for two years is huge.

Bernie Madoff would have been proud of this one!

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Yes, I remember the '80s car thing resulting in investment funds to buy a share of super cars - a few years later they were being flogged off for a fraction of their cost.

Thing is, no one put their hand up and said "Hmm, was this a ponzi?" (And I ain't suggesting it was) but people just accepted it that the prices had tanked. I think, today, people would be less 'understanding'.

This investment fund idea surely is a sign of a top?

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Yes, I remember the '80s car thing resulting in investment funds to buy a share of super cars - a few years later they were being flogged off for a fraction of their cost.

Thing is, no one put their hand up and said "Hmm, was this a ponzi?" (And I ain't suggesting it was) but people just accepted it that the prices had tanked. I think, today, people would be less 'understanding'.

This investment fund idea surely is a sign of a top?

I think so.

Given the anticipated size of the fund, it appears to be specifically designed to attract retail rather than wholesale investors.

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Sheeple, especially older ones, know that house prices can fall, they just conveniently "forget" because the lure of free money is too intoxicating, IMO the collective memory about falls is being stimulated about now. The Tories being back at the levers of power will help many with their recollections I think laugh.gif

Older sheeple look back over their lives and see a couple of blips down in an otherwise overall inexorable rise in property prices.

Personally, I do not share the views of most of my contemporaries. However, the resilience of the market since the credit crunch surely indicates we are much more likely to get a flat market for the next 10 to 20 years rather than a crash.

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Older sheeple look back over their lives and see a couple of blips down in an otherwise overall inexorable rise in property prices.

Personally, I do not share the views of most of my contemporaries. However, the resilience of the market since the credit crunch surely indicates we are much more likely to get a flat market for the next 10 to 20 years rather than a crash.

The question to ask is what were the conditions that enabled the housing market to be so resilient during the credit crunch and how sustainable these conditions might be over the long run.

My personal opinion is that the fiscal and monetary authorities have already shot all of their bullets which leaves the market very vulnerable to reacting in the way that it would have without interfernce by fiscal and monetary authorities during the credit crunch.

The risk has actually been made larger by preventing the first two years of natural adjustment in prices to then current conditions from taking place. The natural adjustment in prices to current conditions will have to now take place over a shorter time scale.

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Yes, I remember the '80s car thing resulting in investment funds to buy a share of super cars - a few years later they were being flogged off for a fraction of their cost.

Thing is, no one put their hand up and said "Hmm, was this a ponzi?" (And I ain't suggesting it was) but people just accepted it that the prices had tanked. I think, today, people would be less 'understanding'.

This investment fund idea surely is a sign of a top?

As a bit of a classic car enthusiast, I note that real classics regularly set new records at auction. And if, in 1974, I had bought the Austin Healey 3000 Mk II in Kingfisher Blue over Old English White with red leather seats, for sale in a local dealer for £495 and had kept it until today, my 'investment' would have gone up by a factor of 50. Instead my Dad talked me out of it because the insurance would be so high.

At about the same time (bit earlier - about 1972 - I was in the process of buying a 3 bed end terrace in the outer suburbs of West London for £11k. By now this would have gone up by a factor of about 25.

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The question to ask is what were the conditions that enabled the housing market to be so resilient during the credit crunch and how sustainable these conditions might be over the long run.

My personal opinion is that the fiscal and monetary authorities have already shot all of their bullets which leaves the market very vulnerable to reacting in the way that it would have without interfernce by fiscal and monetary authorities during the credit crunch.

The risk has actually been made larger by preventing the first two years of natural adjustment in prices to then current conditions from taking place. The natural adjustment in prices to current conditions will have to now take place over a shorter time scale.

Well I guess the next couple of years will prove who's right. I hope it's you. From my point of view, the government has managed to keep house prices at (what ought to be) unsustainable levels for about 7 years so far. And the longer it goes on, the more 'sustainable' the 'unsustainable' prices look.

I'm beginning to think the only way this will change is concerted action - a rent strike by youngsters would do it - if they all just moved home. Never going to happen though.

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Well I guess the next couple of years will prove who's right. I hope it's you. From my point of view, the government has managed to keep house prices at (what ought to be) unsustainable levels for about 7 years so far. And the longer it goes on, the more 'sustainable' the 'unsustainable' prices look.

I'm beginning to think the only way this will change is concerted action - a rent strike by youngsters would do it - if they all just moved home. Never going to happen though.

Nonsense. Securitiztion kept the credit flowing and then desperate Gordon did a couple of years worth of manipulation. Where does that leave us? at the edge of the cliff I`d say? Many of the Tesco generation already are home, many more Poles and others are going, student places and housing benefit will be cut, and eventually mortgage support. Here in the centre of Edinburgh there are empty flats everywhere, take away the tenant and the HPI and what is the point of paying a mortgage on some little shoebox? problem is it is too late to exit the market unless at rock bottom "priced to sell". There will be a massive collapse in rent and prices. As I have posted many times, my rent in central Edinburgh has only increased by one hundred pounds a month in the last 13 years, and fifty of those pounds were the present landlord putting a cheeky raise in just before the crisis became to obvious, I didn`t bother to argue, plenty ways to knock another hundred (back to 1997 rent) a month off in the coming months.

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I remember this too. I think that the Jag XJ220 was the poster child for this problem. People put down deposits in the later 80s / very early 90s expecting huge specualtive gains. By the time cars started rolling off the production line, Jag had a hard time enforcing agreed sales.

I hate to be a pedant, but.... one of the problems with the XJ220 was that deposits were taken on the basis that it would be a V12 engined 4 wheel drive monster (like the prototype) and when it actually made it into production it was 2 wheel drive and had the V6 engine out of the Metro rally car. People understandably were not happy about this. But agreed, if the financial climate was dodgy it was a good excuse to bail out...

We're all gamblers in a rigged game....

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Well I guess the next couple of years will prove who's right. I hope it's you. From my point of view, the government has managed to keep house prices at (what ought to be) unsustainable levels for about 7 years so far. And the longer it goes on, the more 'sustainable' the 'unsustainable' prices look.

I'm beginning to think the only way this will change is concerted action - a rent strike by youngsters would do it - if they all just moved home. Never going to happen though.

The party has only hung on here because of ultralow interest rates, slightly lower unemployment than the USA as of yet and less subprime lending than there. BUT that's not the whole story. It has been sustained by a £300bn mortgage fund set up by BOE with Brown to ensure mortgage funds were immediately available after the banks collapsed. That is running out and NEITHER the money markets nor the BOE will be replacing it IMHO. The old days, when home prices reflected incomes and savings within a country will be revisited soon! You used to save in a building soc, a minimum 5% or 10% deposit, then borrowed 2.5 x your income as that's all they allowed. Oddly enough the home prices around you seemed to fit in with your 2.5 x income sum and deposit. If no savings had been placed in the Society to cover your intended loan, then you were put in a mortgage list/queue until there were the funds. A bit different to banks playing on money markets to 'book' money which only exists in thin air on a piece of paper. It has never been printed and is unrelated to any hard asset to back it up. Now, I wonder why no one expected a bubble if you were suddenly allowed to borrow 6 x your income?!

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Anyone remember the estate agent we all baited on here who offered you money if you got in negative equity just before the crash...I think he was from Ipswich or Norwich.....anyone remember the thread? i wonder how he is doing.... :P:P:P

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I hate to be a pedant, but.... one of the problems with the XJ220 was that deposits were taken on the basis that it would be a V12 engined 4 wheel drive monster (like the prototype) and when it actually made it into production it was 2 wheel drive and had the V6 engine out of the Metro rally car. People understandably were not happy about this. But agreed, if the financial climate was dodgy it was a good excuse to bail out...

We're all gamblers in a rigged game....

Fair enough.

I was always under the impression that the performance of the actual car was better than that of the prototype.

At the time, I was more worried about the price and performance of Honda Civics than XJ220s .......

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It has been sustained by a £300bn mortgage fund set up by BOE with Brown to ensure mortgage funds were immediately available after the banks collapsed. That is running out and NEITHER the money markets nor the BOE will be replacing it IMHO.

Does anyone see the gov/BOE/someone else renewing this fund? How much is left? Can't see the gov allowing a HPC.

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There's something a bit odd about that website. It seems to be advertising a financial product for sale to the public but nowhere does it say anything about any of the parties being FSA registered or similar.

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I have always though that asset managers are there to generate fees for managers rather than returns for investors.

In our lifetime, yes. It wasn't always so; only since the markets went "retail" I guess. It's beyond a joke now.

Excellent observations in your OP, I agree with your analysis.

What is their "well defined exit strategy" other than dumping on to the Hamptons sales network? That's not a strategy, that's a planned glut.

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Does anyone see the gov/BOE/someone else renewing this fund? How much is left? Can't see the gov allowing a HPC.

Warren Buffett maybe? Come on, the government can`t afford these schemes, they know hpi as a driver of the economy is over, althought they are not going to spell it out to the sheeple until they can get some sort of manufacturing/food growing/cannabis cultivation to replace it.

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There's something a bit odd about that website. It seems to be advertising a financial product for sale to the public but nowhere does it say anything about any of the parties being FSA registered or similar.

When I visit the website I get a popup window. The first paragraph reads:

The contents of this website and the information contained within it are only directed at investment professionals within the meaning of regulation 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 ("the Order") and any invitation or inducement to engage in investment activity contained within this website is only made to such persons. If you are not an investment professional within the meaning of the Order no investment activity will be undertaken with you and no application for any investment by you will be accepted.

This is effectively an exemption to the Financial Services and Markets Act 2000. They are not selling to the general public.

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  • 140 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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