Rust Not Bust?

[Home Sick]

With the report today from Nationwide that house prices for August are down only 0.2% on July, knocking annual inflation in house prices from 2.6 to 2.3%, does this mean that we are in for a long slow decline in house prices over a period of several years rather than a dramatic crash?

Are we looking at a long term attrition in house prices, Japanese style? With a slow drift downward over many years it could be a long time before differentials in house prices and income for first time buyers swing back into line.

However, with oil prices at almost $70 a barrel and hurricane Katrina having devastated US oil production in the Gulf of Mexico, will this be the global trigger for a recession, and even stagflation, due to chaos in the energy markets?

If anything could knock house prices for six, then surely Katrina was the 'perfect storm'. In contrast, Katrina could put the brake on the Fed's 'measured pace' of tightening - maybe even triggering another 9/11 style relaxation in interest rates? Would this spark yet another housing boom on the back of cheap money?

Thoughts please.

[Dames]

A crash takes 3-4 yrs IMHO , thats the timescale I'm looking at from when I sold.

Dames

[the don]

the decline in average prices was 0.65% in the month(8%per annum)

their index( which measures prices growth from 1993) dropped by 0.2 %

they highlighted the 0.2 % presuambly to make it look as if the fall was smaller than it really was.

as the declines are just getting going, it looks like we may see a pretty fast crash IMHO

[Unexpected]

As almost everyone on this forum keeps on saying, the "crash" will not happen quickly unless anything extremely unexpected happens. We are looking at a long (but possibly accelarating) slow decline. Remember that a long slow decline will be more devastating to the housing market and economy than a quick crash.

Would you prefer if this site was called "House Price Long slow decline over several years"?

[backtoparents]

As almost everyone on this forum keeps on saying, the "crash" will not happen quickly unless anything extremely unexpected happens. We are looking at a long (but possibly accelarating) slow decline. Remember that a long slow decline will be more devastating to the housing market and economy than a quick crash.

Would you prefer if this site was called "House Price Long slow decline over several years"?

<{POST_SNAPBACK}>

So not so much a bubble going pop .... more like a Whooppee Cushion. Rasppppp!

http://www.housepriceguff.com

Edited September 1, 2005 by backtoparents

[sign_of_the_times]

the decline in  average prices was 0.65% in the month(8%per annum)

their index( which measures prices growth from 1993) dropped by 0.2 %

they highlighted the 0.2 % presuambly to make it look as if the fall was smaller than it really was.

as the declines are just getting going, it looks like we may see a pretty fast crash IMHO

<{POST_SNAPBACK}>

seems all this "seasonally adjusted" crap is only ever in their favour. :angry:

[BuyingBear]

As almost everyone on this forum keeps on saying, the "crash" will not happen quickly unless anything extremely unexpected happens. We are looking at a long (but possibly accelarating) slow decline. Remember that a long slow decline will be more devastating to the housing market and economy than a quick crash.

Would you prefer if this site was called "House Price Long slow decline over several years"?

<{POST_SNAPBACK}>

Indeed, the same applies to oil on the inverse of course.

People make great bones to point out that adjusted for inflation oil today is below the early and late 70's spikes, which is true, except they ignore the fact this was a politically induced spike, what we have now is sustained high prices, this has been signifcantly above trend for 18 months now, and 50% up on the start of 2005 alone.

Think about it, you go into a shop five times a week and buy a widget each day, they're usually £1 each but on Tuesday the price spiked to £3 then dropped back again the next day. You go in the following week and the price is 'stable' at £2 per widget each day you visit, so the price is only 2/3 of the spike of the previous week, but over the course of the latter week, which ends up costing more?

You don't require a super-spike in oil, accumulatively high prices if sustained for long enough is just as damaging, but much like boilling a frog it's not a shocking as a 'spike'.

Edited September 1, 2005 by BuyingBear

[othello]

With the report today from Nationwide that house prices for August are down only 0.2% on July, knocking annual inflation in house prices from 2.6 to 2.3%, does this mean that we are in for a long slow decline in house prices over a period of several years rather than a dramatic crash?

Are we looking at a long term attrition in house prices, Japanese style?  With a slow drift downward over many years it could be a long time before differentials in house prices and income for first time buyers swing back into line.

However, with oil prices at almost $70 a barrel and hurricane Katrina having devastated US oil production in the Gulf of Mexico, will this be the global trigger for a recession, and even stagflation, due to chaos in the energy markets? 

If anything could knock house prices for six, then surely Katrina was the 'perfect storm'.  In contrast, Katrina could put the brake on the Fed's 'measured pace' of tightening - maybe even triggering another 9/11 style relaxation in interest rates?  Would this spark yet another housing boom on the back of cheap money?

Thoughts please. 

<{POST_SNAPBACK}>

[boom_and_bust]

With the report today from Nationwide that house prices for August are down only 0.2% on July, knocking annual inflation in house prices from 2.6 to 2.3%, does this mean that we are in for a long slow decline in house prices over a period of several years rather than a dramatic crash?

Are we looking at a long term attrition in house prices, Japanese style? With a slow drift downward over many years it could be a long time before differentials in house prices and income for first time buyers swing back into line.

However, with oil prices at almost $70 a barrel and hurricane Katrina having devastated US oil production in the Gulf of Mexico, will this be the global trigger for a recession, and even stagflation, due to chaos in the energy markets?

If anything could knock house prices for six, then surely Katrina was the 'perfect storm'. In contrast, Katrina could put the brake on the Fed's 'measured pace' of tightening - maybe even triggering another 9/11 style relaxation in interest rates? Would this spark yet another housing boom on the back of cheap money?

Thoughts please.

Hi,

All this stuff has been covered in previous threads with stats, charts, figures and historical and international

references. It really is worth flicking through it all to see the bull-bear debates offset against eachother.

A slow puncture seems to be the preferred route of the VI media spinners but my gut feeling (which granted does not hold any weight whatsoever) is it is just wishful thinking. As it has been mentioned, the results on consumption to the economy are devastating from the observeable experiences of other nations.

The two examples the spinners were giving for a soft landing even upto a year ago were Holland and Australia. Holland's economy was held to ransom by the massive HPI they underwent before the UK boom. Trying to prevent HPC pushed the economy into a nasty recession. Not my words, the Dutch Chancellor said that in the press. It didn't work, they enetered (at least the main cities) a HPC anyway. Australia didn't pull it off either. Depending on which sources you believe, there have been falls in the region of 10-20% in many cities (including the biggies Sydney and Melbourne) in the past year. The Japan route is really not a way that anyone would want. A decade of everything in slump, something that tangibily reduced the wealth of just about every area in the economy. Quick, sharp fall with a bounce back within 2-3 years would be much more preferable IMHO.

Look at historical trends. The UK property market has never behaved in this way in the past. It was again argued upto a year ago that Gordon's new economic miracle would support this change of behaviour. The economy really did seem to be defying gravity, beating the historical influence of cycles. Maybe, just maybe, Britain had the achieved a new economic order, an ever increasing wealth supporting an ever increasing value of houses. What a long time a year is. High oil prices, slumping economic growth, slumping high street sales, massive trade defecits, massive budget defecits, increasing insolvencies, increasing home repocessions, trillion pound debt levels, increasing unemployment, manufacturing recession, etc., Just look now at the amount of media analysis berating Gordon's economic performance as a sham of mis-spending and debt. The IMF for one have expressed grave concerns over the future viability of the UK economy with current house prices and personal debt levels. Very, very rare for them to identify an individual nation.

We have still not received any decent Bull arguments for several months. Something that is coherently strung together with references you can relate to the economy, demographics, something. In that absence, I'll go for a fall somewhere from 20-30% over the next 2-3 years as things stand. I am very receptive to any good counter argument mind. As long as it isn't 'yeah, well, this bloke down the pub said its different this time'.

Boomer

[zorn]

seems all this "seasonally adjusted" crap is only ever in their favour. :angry:

This is blatantly untrue. For example, the 0.2% increase they reported in July would have been 0.35% without the seasonal adjustment. The 0.2% decrease reported in March would have been a 0.65% increase unadjusted.