Okay Where Are We Now?

[waitingscot]

Four years since I started reading this site, I am really starting to think we have had most of the "house price crash" we are going to get. Banks are posting profits again. The banks should have collapsed but governments stopped it with our money, and we will be paying for it for years to come. There will be no final reckoning, no revolution, no hyperinflation, no deflationary spiral or anything like that. Just boring old: establishment creamsoff the wealth while the plebs toil. Same as it ever was.

I see house prices bumping around for years to come, maybe a slight real terms decline over the next few years, but nothing much to get excited about. Peak oil has not materialised as a major problem yet. Capitalism looks like it will live to fight another day.

I think either I will buy a small place in the coming year, or else move to Austria.

[pablopatito]

+1

(apart from the Austria bit, though I would if I could speak the language).

[Mal Volio]

A very good question

I'm convinced we're on the cusp of a sentiment-shift; it feels to me like 1989; much more so that 2008 did. I'm just not so sure how it'll pan out now.

I agree that we seem to be moving away from a single event that will cause a sudden drop, and (barring the unexpected) we're likely in for a long period of adjustment. My expectation for the next year or so is of sales volumes tending to zero, and only those that *have* to sell trying to sell. Supply, in other words, will dry up again but this time there'll be a lot less demand so no price rises on the back of the tiny sales volumes. Falls, if anything, but drawn-out. I'd also take a guess that real inflation will be allowed to run at 5% or so, eroding savings and (if you've got a decent job) helping pay down the debt.

Rather depressing, really.

[AvidFan]

This is an area in the Midlands I keep an eye on:

http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION%5E27473&insId=1&sortByPriceDescending=false&radius=3.0&index=10

I get to the second page and find flats on at 36K and 49K. A house on at 42K.

Not good areas by any means - but you'd have struggled to find anything available at 80K or less a couple of years ago.

Those 69K 2-bedroom flats on page 6 were 89950 last year - whether anyone sold at those prices - who knows.

Cheap property is literally pouring onto the market.

Average prices must be being maintained by high-end properties coming on too.

To TMT: Move to the sunny West Midlands and commute to Swansea.

Edited August 9, 2010 by AvidFan

[Georgia O'Keeffe]

Four years since I started reading this site, I am really starting to think we have had most of the "house price crash" we are going to get. Banks are posting profits again. The banks should have collapsed but governments stopped it with our money, and we will be paying for it for years to come. There will be no final reckoning, no revolution, no hyperinflation, no deflationary spiral or anything like that. Just boring old: establishment creamsoff the wealth while the plebs toil. Same as it ever was.

I see house prices bumping around for years to come, maybe a slight real terms decline over the next few years, but nothing much to get excited about. Peak oil has not materialised as a major problem yet. Capitalism looks like it will live to fight another day.

I think either I will buy a small place in the coming year, or else move to Austria.

Who knows,

My personal opinion is pretty much unchanged since 2007 but im basing it on the stockmarket more than housing. Weve had the mandatory decline, and have almost if not completed (may be one final push back up tp 5900 over the next couple of months) the mandatory rally and are entering the stage weve been building to the last decade,

So as in 2007 when it started by end 2013 id still go with

FTSE sub 1000

Houseprice index sub 100K

1 GBP less than 1 dollar

Economically inactive 10 to 13 million range (probably nearer the upper band)

Interest rate hard to say but possibly in excess of 10% as the result of Currency crisis

Bottom sometime around 2015/16

could be wrong though

i remain pretty confident the banks will collapse ...again in the next leg down

and because they were stupid enough to try bailing them out the first leg down im pretty sure countries will default aswell, which may or may not have happened had they not tried to take on the banks debts in the first leg down

Edited August 9, 2010 by Tamara De Lempicka

[AvidFan]

So as in 2007 when it started by end 2013 id still go with

FTSE sub 1000

Houseprice index sub 100K

1 GBP less than 1 dollar

Economically inactive 10 to 13 million range (probably nearer the upper band)

Interest rate hard to say but possibly in excess of 10% as the result of Currency crisis

Bottom sometime around 2015/16

could be wrong though

FTSE to mid-90's levels

Housing index to 125K (no undershoot).

1 GBP = 1.3 USD minimum - more likely 1.4x by 2013 - not before. And an immediate turnaround too.

Headline unemployment: 3 million. Economically inactive - yep - 10 million.

Interest rates: Heading up as late as 2013 and will be negative in real terms at all times, i.e. not as high as you'd think.

The "real" currency crisis: USD, not GBP. Starting around 2013/2014.

[Georgia O'Keeffe]

FTSE to mid-90's levels

Housing index to 125K (no undershoot).

1 GBP = 1.3 USD minimum - more likely 1.4x by 2013 - not before. And an immediate turnaround too.

Headline unemployment: 3 million. Economically inactive - yep - 10 million.

Interest rates: Heading up as late as 2013 and will be negative in real terms at all times, i.e. not as high as you'd think.

The "real" currency crisis: USD, not GBP. Starting around 2013/2014.

id probably tend to agree with you about a USD currency crisis starting around that time end of 13/14

The only problem i have with interest rates staying low is my view on Gold, whilst still currently bullish i dont think its got much more than about 6 months of it bull market left and gold is essentially a negative interest rate play which leads me to believe that for gold to spank interest rates will be going up pretty heftily at some point

[Guest_FaFa!_*]

Housing index to 125K (no undershoot).

Interest rates: Heading up as late as 2013 and will be negative in real terms at all times, i.e. not as high as you'd think.

Could you explain your thinking on those two. Why do you think GBP won't face a crisis? And what is the rationale for 125k?

[The Masked Tulip]

A very good question

I'm convinced we're on the cusp of a sentiment-shift; it feels to me like 1989; much more so that 2008 did. I'm just not so sure how it'll pan out now.

I agree that we seem to be moving away from a single event that will cause a sudden drop, and (barring the unexpected) we're likely in for a long period of adjustment. My expectation for the next year or so is of sales volumes tending to zero, and only those that *have* to sell trying to sell. Supply, in other words, will dry up again but this time there'll be a lot less demand so no price rises on the back of the tiny sales volumes. Falls, if anything, but drawn-out. I'd also take a guess that real inflation will be allowed to run at 5% or so, eroding savings and (if you've got a decent job) helping pay down the debt.

Rather depressing, really.

+1.

I have never known such uncertain times in my adult life. I can remember the 70s as a child and, as bad as the 80s were in my part of the country, this does not yet feel like the 80s yet.

But there is a sense of foreboding - all these public sector cuts will eventually materialise then, in which case, in many parts of the UK you probably will no longer wish to buy a house. Or the public sector cuts will be no where as bad as made out... or they will fire loads and give them a sizeable cheque for going... and nothing will change.

I think the game plan is to allow inflation to erode mortgage debt and hence anyone with savings, especially STRers, will be wiped out in time.

My plan is now simple - wait until the Autumn, wait for a few to panic or forced sellers and then jump in.

[The Masked Tulip]

To TMT: Move to the sunny West Midlands and commute to Swansea.

I fear there will come a time when the occasional visit will no longer be required. Just walked around the city centre and if this is what 13 years of boom brings you then I daren't think about the next 10 years of bust.

[headrow]

+1.

I have never known such uncertain times in my adult life. I can remember the 70s as a child and, as bad as the 80s were in my part of the country, this does not yet feel like the 80s yet.

But there is a sense of foreboding - all these public sector cuts will eventually materialise then, in which case, in many parts of the UK you probably will no longer wish to buy a house. Or the public sector cuts will be no where as bad as made out... or they will fire loads and give them a sizeable cheque for going... and nothing will change.

I think the game plan is to allow inflation to erode mortgage debt and hence anyone with savings, especially STRers, will be wiped out in time.

My plan is now simple - wait until the Autumn, wait for a few to panic or forced sellers and then jump in.

I presume from the above that you are late 30's early 40's.

Why don't you own a house , there have been plenty of times in the last two decades when houses have been far more reasonably priced than they will be next autumn.

[Bloo Loo]

I WANT IT NOW>>>NOW NOW NOW NOW NOW NOW NOW NOW.

Course, banks ARENT making real profits....they had and still have a liquidity problem...otherwise they would have paid back...which they havent.

[LiveinHope]

When I look around me, I think that the level of expenditure I see by many people is still unsustainable. That is what I base my views upon, whether they are correct....

These are anecdotals from the southwest, where 1 in 10 people have more than one home

This weekend I noticed many more for sale boards than recently.

I know of a property marketed at 1.2 million 12 months ago, still unsold at 775K. IMO it is worth between 5 and 600K

There was a thread on this board at the end of last week describing a 4 bed chocolate-box, thatched cottage marketed at a reasonable 250K. The cottage had 4 beds but no bath, but did have a fancy (very) shower. One of the four bedrooms was really no more than a 'box room' and the other a large cupboard (5.5' x 7.5'). A rental for this property would be between 1 and 1.5k tops. Still 30% over valued. Although I agree it is worth what someone will pay.

I know of a set of local barn conversions (no land included) that were sold new around the peak of the market. One 2-bed sold for 395K in Nov 2006 and then again for 450K in Nov 2007, which is an ~14% increase. A different one of the set is now for sale at less than its original 2006 price and still has had no offers. In past times these would not have lingered.

My City Centre is rapidly becoming boarded up, and one of the 5 main department stores closed down two weeks ago.

My local rural pub used to get through a bullock a week. Not so now, and it is the most popular pub in the area.

If the government departments are looking to save 16 million (the milk debacle) then IMO it hasn't even started yet. We are down to looking after the pennies.

As soon as the support for the economy disappears and people see the cuts, then there will be a realisation of what value is IMO, and perhaps some fear too.

(edited for spelling and accuracy)

Edited August 9, 2010 by LiveinHope

[The Masked Tulip]

I presume from the above that you are late 30's early 40's.

Why don't you own a house , there have been plenty of times in the last two decades when houses have been far more reasonably priced than they will be next autumn.

Well, not that is anyone's business but I will tell you as you asked. I did something that doctors, nurses and social workers tell me is incrasingly rare nowadays - I looked after an elderly parent for many years whilst juggling that with a job. I am not the only HPCer to have been, or be, in this position.

When you have someone to care for, which you yourself may have already or may have oneday, buying property is actually the last thing on your mind. In fact, you worry about what will happen to your relative if you are not around so you go out of your way to minimise debt and financial obligations.

Yes, with hindsight buying a property in 1999 or 2000 would have been preferable but hindsight is a wonderful thing is it not.

Some on here will not understand this until they go through it themselves. Others, as I know, understand it all too well.

[ElPapasito]

Interesting reflections above. Back in 2008 when TSHTF I thought 2010 would be the nadir year of the depression that was unfolding. I have been surprised how well the life support medicine worked - as in how well George Best's liver transplant worked. The trouble always was George's life choices. Our troubles in the post war era have always been the structure of our economy. In my analogy George has been drinking the medicinal alcohol prescribed to him for the 18 months since being discharged but still refuses to go out onto the pitch to train. He is about to drop dead. Our capitalist economy is going to drop dead and it looks to me the danger period starts in mid-2011 through to 2012. That is when so many of the hypocrises of our current set up look set to blow up or just become untenable to carry on underwriting. EP

[AvidFan]

Could you explain your thinking on those two. Why do you think GBP won't face a crisis? And what is the rationale for 125k?

I'm not a conspiracy theorist, but I do think the US has structural problems rather like we had in the late 70s and early 80s and they're going to deal with them - literally. This decade will be the US's first fall from grace, whereas we've been through the lowest point of post-empire in the early 80s. Basically, given the fact you have a functional workforce that is no better or worse than anyone elses, there's only so low you can go.

We never really regained our previous wealth - we've been bottom bouncing for the last 30 years. That puts us averagely on some positive number above zero whereas the states is about to hit "zero" for the first time - and it's going to be hard, long and miserable like ours was (197x to 198x). We have a much more brainwashed, compliant society today than ever before. People that are used to working are desperate to work and will move and retrain for it - not like the 70s. We have puny unions now - look at BA and the removal of members rights to free flights. They're having to beg even to get those back. Not so in the states - teamsters, auto workers - they've got a huge mountain to climb. Plus the tea parties and other action groups. A *lot* of strong feelings there and expectations of entitlements that are going to take decades to smash.

GBP/USD: If you look at national debt - the US will go over 100% of GDP sometime in 2012. They're already at 90%. We won't go anywhere near that now the Condems are in. By the time peak oil hits (2013/2014) it'll be too late. Economies have turning circles of decades, not months or a few years. GDP growth in the US will shrink by depression levels again (-6% or more) whereas ours will stay flat or even grow slighty. Europe's will stay largely flat. As the US runs 10%+ current account deficits, 5% of which will be clearly structural and 5% will be energy related, the dollar will devalue by 50% on a trade-weighted basis. It'll bounce back of course. Sterling should actually be one of the most desired currencies, strangely. Traders will see the Swiss, Danish, British and other European economies survive even with oil prices at some extreme ($300 perhaps). The US won't. Our debt markets and those of Europe will capture most of the capital flight from the US dollar. As long as they can manage to plate-spin the £800bn money-market loans we've used to finance our mortagge borrowing up until then, we'll be fine.

I think we'll see a huge devaluation in the Yen (after which, Japan will be "back" along with the US) and very high rates of inflation in China and India following China's imminent depression.

The safest place to be for the best part of this decade will be in sterling and the Euro. But I wouldn't put it past the market to trade these two lower in 2011 and 2012.

Edited. House prices: They did say they wanted the banks to brace for 40% drops. That's a 120K price tag from the 200K peak. It's also roughly where they've set stamp duty. It's also double the 60K average in the 90's trough, giving a price rise of just over 4% per year for 18 years by 2013 - what you'd have earned after 20% tax on the same amount of money from 1995 to 2013. It's called market efficiency. In addition, I think the real falls will be larger - inflation will pick up again with the 20% VAT hike and by 2013, the oil price should be starting to bite.

Edited August 9, 2010 by AvidFan

[Mal Volio]

deleted

Edited August 9, 2010 by Mal Volio

[goldbug9999]

I presume from the above that you are late 30's early 40's.

Why don't you own a house , there have been plenty of times in the last two decades when houses have been far more reasonably priced than they will be next autumn.

Perhaps he did and is now divorced ... like me

[The Masked Tulip]

I'm not a conspiracy theorist, but I do think the US has structural problems rather like we had in the late 70s and early 80s and they're going to deal with them - literally. This decade will be the US's first fall from grace, whereas we've been through the lowest point of post-empire in the early 80s. Basically, given the fact you have a functional workforce that is no better or worse than anyone elses, there's only so low you can go.

We never really regained our previous wealth - we've been bottom bouncing for the last 30 years. That puts us averagely on some positive number above zero whereas the states is about to hit "zero" for the first time - and it's going to be hard, long and miserable like ours was (197x to 198x). We have a much more brainwashed, compliant society today than ever before. People that are used to working are desperate to work and will move and retrain for it - not like the 70s. We have puny unions now - look at BA and the removal of members rights to free flights. They're having to beg even to get those back. Not so in the states - teamsters, auto workers - they've got a huge mountain to climb. Plus the tea parties and other action groups. A *lot* of strong feelings there and expectations of entitlements that are going to take decades to smash.

GBP/USD: If you look at national debt - the US will go over 100% of GDP sometime in 2012. They're already at 90%. We won't go anywhere near that now the Condems are in. By the time peak oil hits (2013/2014) it'll be too late. Economies have turning circles of decades, not months or a few years. GDP growth in the US will shrink by depression levels again (-6% or more) whereas ours will stay flat or even grow slighty. Europe's will stay largely flat. As the US runs 10%+ current account deficits, 5% of which will be clearly structural and 5% will be energy related, the dollar will devalue by 50% on a trade-weighted basis. It'll bounce back of course. Sterling should actually be one of the most desired currencies, strangely. Traders will see the Swiss, Danish, British and other European economies survive even with oil prices at some extreme ($300 perhaps). The US won't. Our debt markets and those of Europe will capture most of the capital flight from the US dollar. As long as they can manage to plate-spin the £800bn money-market loans we've used to finance our mortagge borrowing up until then, we'll be fine.

I think we'll see a huge devaluation in the Yen (after which, Japan will be "back" along with the US) and very high rates of inflation in China and India following China's imminent depression.

The safest place to be for the best part of this decade will be in sterling and the Euro. But I wouldn't put it past the market to trade these two lower in 2011 and 2012.

Edited. House prices: They did say they wanted the banks to brace for 40% drops. That's a 120K price tag from the 200K peak. It's also roughly where they've set stamp duty. It's also double the 60K average in the 90's trough, giving a price rise of just over 4% per year for 18 years by 2013 - what you'd have earned after 20% tax on the same amount of money from 1995 to 2013. It's called market efficiency. In addition, I think the real falls will be larger - inflation will pick up again with the 20% VAT hike and by 2013, the oil price should be starting to bite.

Or the US could simply pull the trade drawbridge up and simply not allow other countries' goods into the US - much like they did in the 1930s.

The US economy is large enough to generate huge growth if, and only if, the US people buy goods made in the US from US owned companies.

I think it is only time before the US reverts to this. Ironically, I suspect Japan and the UK, possibly Mexico and Canada also for geo-political reasons, might be the exceptions to any US embargo. Then again, we barred US goods in the 1930s also.

[The Masked Tulip]

deleted

Mal Volio in intriguing mode.

[AvidFan]

Or the US could simply pull the trade drawbridge up and simply not allow other countries' goods into the US - much like they did in the 1930s.

The US economy is large enough to generate huge growth if, and only if, the US people buy goods made in the US from US owned companies.

I think it is only time before the US reverts to this. Ironically, I suspect Japan and the UK, possibly Mexico and Canada also for geo-political reasons, might be the exceptions to any US embargo. Then again, we barred US goods in the 1930s also.

I can see this - but it wouldn't stop the $60bn a month going to petrostates. They're definitely "toast" this decade. They'd have to stop all other trade, be 100% self-sufficient and generate huge revenues through internal production and consumption. They're self-sufficient in food and the basics - so why not? I guess it's possible - but will they?

Edited: You have to ask yourself - do they want to survive this decade with the dollar worth what it is today and all the entitlements they can't pay for? Answer: No.

Edited August 9, 2010 by AvidFan

[bricor mortis]

My City Centre is rapidly becoming boarded up, and one of the 5 main department stores closed down two weeks ago.

Plymouth ? ( Derry's department store )

I think where we are is all a bit deflated by the Halifax figure. After all being happy bears after the bearwave.

I personally never expected things to change before autumn.

As has been said on here today somewhere, only 35% of houses manage to sell within 1 year. So any " must sell now " cases are going to have to look at discounts of up to 20%. Thats where we are, isnt it ?

edited to insert necessary comma.

Edited August 9, 2010 by bricor mortis

[singlemalt]

My present take on things.

FTB's are what oxygenates the housing market. Without a healthy supply of FTB's the market simply chokes. It's like a stagnating pond where the fish (sellers) are becoming increasingly desperate as they come to the surface gasping for air.

Only falling prices can act as a fresh water source thus re-invigorating the market.

[bricor mortis]

This is an area in the Midlands I keep an eye on:

http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION%5E27473&insId=1&sortByPriceDescending=false&radius=3.0&index=10

I get to the second page and find flats on at 36K and 49K. A house on at 42K.

Not good areas by any means - but you'd have struggled to find anything available at 80K or less a couple of years ago.

Those 69K 2-bedroom flats on page 6 were 89950 last year - whether anyone sold at those prices - who knows.

Cheap property is literally pouring onto the market.

Average prices must be being maintained by high-end properties coming on too.

To TMT: Move to the sunny West Midlands and commute to Swansea.

What a lot of posters dont get is that the crash is already on when you consider the wider midlands areas.

For any doubters search Nottingham or Stoke on Trent say, houses under 125k. Its crashtastic.

[LiveinHope]

Plymouth ? ( Derry's department store )

Yes

How the staff remained cheerful until the last day. They deserved a medal..if not a job.

Especially when I overheard a customer ask a salesperson on the penultimate day:

"This pair of shoes (then 25% of full price), will they be cheaper if I come back tomorrow ?"

The only decent store that sold anything different in Plymouth.