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Smug? No, Not Just Smug. Smug Again.

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Following the initial decline in house price indices, we had our 'told you so' party, but then things quietened down here for a while. The crash had arrived, as predicted and debate died away, as there was no longer any question about the potential of HPC.

Discussion then turned to why this site went so quiet. I remarked at the time that it was because the issue under debate had been settled by events.

During the government engineered, pre election house price rally, the bulls politely re-emerged to declare that the crash had failed to materialise, that things were getting back to normal and that the correction had been minor.

Many thanks to all involved for priming the shadenfreude tanks for us.

Told you so.

Bull trap over. Lifecycle of a Bubble, right on track.

Here comes Fear, leading to Capitulation.

Party Party!

Smug again.

Thanks, guys.

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Haven't seen this brilliant chart for a while, known as "The Psychology of a Bubble". Parts of the country are already well into "fear".

bubblepsychology.jpg

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Guys, I don't want to ruin the hpc party and I still believe house prices are too high. But I think the views here on the general economy (ie excluding house prices) are far to0 negative.

Yes, bits of the economy and country that are depending on the public sector intravenous drip will be in trouble, but round London and the South East business is now booming again. I am about the get my highest annual income ever, and I am not even in banking.

The ideal scenario is that the economy grows, wages go up at 5% per year and house prices stay flat for the next 50 years.

Edited by Mikhail Liebenstein

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  Guys, I don't want to ruin the hpc party and I still believe house prices are too high. But I think the views here on the general economy (ie excluding house prices)  are far to0 negative.

Yes, bits of the economy and country that are depending on the public sector intravenous drip will be in trouble, but round London and the South East business is now booming again. I am about the get my highest annual income ever, and I am not even in banking.

The ideal scenario is that the economy grows, wages go up at 5% per year and house prices stay flat for the next 50 years.

We only ever see our own bubbles.

I live and work in the S/E.

The company I work for - no pay rises in 2 years and none likely in the future.

The company I work at - no pay rise last year and none this / next year.

I would suggest, from what I see that you are far too positive.

PS combined staff for these companies is about 80 k in UK.

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We only ever see our own bubbles.

I live and work in the S/E.

The company I work for - no pay rises in 2 years and none likely in the future.

The company I work at - no pay rise last year and none this / next year.

I would suggest, from what I see that you are far too positive.

PS combined staff for these companies is about 80 k in UK.

It is also industry dependent. I'm in IT and a lot of people are having to introduce systems to allow their firm to function with the current low staff numbers - consequently we are recruiting as are many other firms in the sector. This all knocks on in a positive way.

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  Guys, I don't want to ruin the hpc party and I still believe house prices are too high. But I think the views here on the general economy (ie excluding house prices)  are far to0 negative.

Yes, bits of the economy and country that are depending on the public sector intravenous drip will be in trouble, but round London and the South East business is now booming again. I am about the get my highest annual income ever, and I am not even in banking.

Its just the last of the QE / low IR fuelled cash injection dissipating itself.

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Such a pointless post, what are you going to do if they start going up again? This post will just end up looking like varying degrees of stupidity.

You can be smug once you've purchased your house on the terms that are ideal to you - until then, it's like crossing the finishing line and declaring yourself the winner of an 800m race after just one lap

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It is also industry dependent. I'm in IT and a lot of people are having to introduce systems to allow their firm to function with the current low staff numbers - consequently we are recruiting as are many other firms in the sector. This all knocks on in a positive way.

Me too ... as I said, lol!

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  Guys, I don't want to ruin the hpc party and I still believe house prices are too high. But I think the views here on the general economy (ie excluding house prices)  are far to0 negative.

Yes, bits of the economy and country that are depending on the public sector intravenous drip will be in trouble, but round London and the South East business is now booming again. I am about the get my highest annual income ever, and I am not even in banking.

Certainly agree. Prices are still crazy around London/SE but business/employment opportunities are clearly picking up (certainly in Investment Banking/IT) and many people earning very good wages. Do not see much of a dent on prices round here despite how insane price levels are.

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The avg housing market peak to bottom is 6-7 years.

SO I would not expect Housing to hit bottom (say 25% lower than now) until 2013/2014 maybe not until 2015.

Give me 5% real inflation for 4 years, and a moderate price decrease (10% nominal) and voila. No dramatic HPC, but prices will have corrected with respect to earnings.

There are several things that make me think further falls (not necessarily a crash) are in the near future:

Very few mortgages are being issued, but the total value of mortgages issued is still holding up. To me this says only expensive houses are being bought and sold. Not exactly a "normal" market.

FTB ages are at historic highs - not very sustainable long term.

Interest rates are very low, if you have a deposit a 3%-5% repayment mortgage is available.

Eventually the base rate will increase then things might get a bit messy. (imagine it at 3% let alone 5%)

Job losses from public sector cuts have not hit yet, these will bite in an around London as Whitehall cuts back.

There has been an increase in supply of housing to be sold, yet sales numbers have not yet increased.

Forced sales have not really started to be an issue due to govt support. This will dwindle in the next few years.

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Guys, I don't want to ruin the hpc party and I still believe house prices are too high. But I think the views here on the general economy (ie excluding house prices)  are far to0 negative.

Yes, bits of the economy and country that are depending on the public sector intravenous drip will be in trouble, but round London and the South East business is now booming again. I am about the get my highest annual income ever, and I am not even in banking.

But a double dip is just round the corner.

Seriously, the government is running a 12% of GDP deficit. Remove that and GDP falls 12%, i.e. twice as much as it fell in the 2008 recession - and that's before you include the knock-on effects of the reduction in spending.

Sure it is industry and geography dependant - I have insolvency practictioner friends who have been having some of the busiest times of their working lives. But overall the maths is going to catch up with the UK economy. We have passed the debt timebomb from individuals to banks to government - but there is precious little fuse left and no-one to pass it to now.

Inflation is no solution, either - the resulting fall in the pound just makes all the food and energy that we import more expensive, further curtailing consumption.

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  • 149 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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