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Killer Bunny

Long Term Outllook

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Having read a post which said 'it has to be soon surely', that moved me to put up this LT outlook post.

Those in L and the SE I have news for you prices are falling but do not expect a 40-50% fall in nominal terms. Such a fall will likely happen in real terms only. The best you can reasonably expect is 30% nominal by 2013/14. When they announce more money printing that may well be the next buy point.

Overall those areas which have fallen the least so far will now fall the most but the most is not likely to be huge.

Expect 40-50% real fall by end of decade. Anything better will be a bonus but cannot be expected.

However, if you are earning and this happens then in 2018/20 you will pick up a relative bargain.

In the meanwhile we are in leg 2 down which will stop with printing #2. Leg 3 down will start when UK needs to repay debt in c 2016 or so.

Look at Greece - when it leaves €uro the Drachma will fall 75%. House prices will move from €250k to D250k but we will buy, if we want, at £75k.

Of course, if you are in gold long term... expect $3000/oz within a few years - but it will NOT be a straight line. There could be another crash before the next parabolic rise.

Thoughts?

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A fall in real terms....how, if wages are not rising, is THAT going to manifest without the nominal fall reflecting it also?

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A fall in real terms....how, if wages are not rising, is THAT going to manifest without the nominal fall reflecting it also?

Wages and returns (even for commercial lenders) historically lag real pricing in periods of high inflation.

Existing debt levels, loss of earning power by the west for the man in the street generally, unemployment, inflation of essential goods and services all put a squeeze on available income to service a credit based purchase.

Remember the old chestnut, how much would a house be if you had to buy one without a mortgage? In the old days rents were higher than mortgage servicing because it was basically an arbitrage of credit worthiness. This is where the vague stigma over renting comes from.

In the future l expect it will be a similar set up with prices being based on people having any money to spare in the first place. Far fewer people will be eligible for credit. This assumes the financial system as is can withstand the trend.

If there is a rebasing (aka currency failure) then housing will be much cheaper in the new regime but relative to what? Key is finding something that maintains its value as we cross this possible event hump.

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long term conditions are predicted to be a few years of shittyness, followed by a ridge of high pressure which is again, bringing in more shittyness to the north in the form of a front of shit.

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Typical bbc doesn't elaborate on the knock down price.

...The best you can reasonably expect is 30% nominal by 2013/14....

...if you are in gold long term... expect $3000/oz within a few years...

Thoughts?

Therefore you are expecting 60% nominal falls if priced in gold?

Edit to add: forgot about the currency exchange thing - with £ falling against the $, the rise of gold in £ will be more than double, so are you expecting 70 /80% fall, when comparing house:gold?

Edited by Lepista

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Having read a post which said 'it has to be soon surely', that moved me to put up this LT outlook post.

Those in L and the SE I have news for you prices are falling but do not expect a 40-50% fall in nominal terms. Such a fall will likely happen in real terms only. The best you can reasonably expect is 30% nominal by 2013/14. When they announce more money printing that may well be the next buy point.

Overall those areas which have fallen the least so far will now fall the most but the most is not likely to be huge.

Expect 40-50% real fall by end of decade. Anything better will be a bonus but cannot be expected.

However, if you are earning and this happens then in 2018/20 you will pick up a relative bargain.

In the meanwhile we are in leg 2 down which will stop with printing #2. Leg 3 down will start when UK needs to repay debt in c 2016 or so.

Look at Greece - when it leaves €uro the Drachma will fall 75%. House prices will move from €250k to D250k but we will buy, if we want, at £75k.

Of course, if you are in gold long term... expect $3000/oz within a few years - but it will NOT be a straight line. There could be another crash before the next parabolic rise.

Thoughts?

I am not sure London prices will fall to that extent. London is a international market. Demand from overseas investors helps to prop up house prices. In addition the economic drivers of london differ from the rest of the UK. I see a small decline to small rise in London house prices. Maybe 5% decline- worst case scenario

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I am not sure London prices will fall to that extent. London is a international market. Demand from overseas investors helps to prop up house prices. In addition the economic drivers of london differ from the rest of the UK. I see a small decline to small rise in London house prices. Maybe 5% decline- worst case scenario

You are hoping for rises then?

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The inflation numbers due tomorrow will be instructive. You can't QE with CPI over twice target. We're currently paying the price for QE1. Starting QE2 while riding the QE1 inflation wave would be suicidal. Remember, QE1 happened during a period of below-target inflation. No such benign situation exists at the moment.

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I am not sure London prices will fall to that extent. London is a international market. Demand from overseas investors helps to prop up house prices. In addition the economic drivers of london differ from the rest of the UK. I see a small decline to small rise in London house prices. Maybe 5% decline- worst case scenario

I am not sure that there is a tendency to revert to the mean. Rents are rising in the UK and Sydney as due to hugh LTVs(UK) and high challenging affordability (AUS). This simple valuation metrics ignore causality, which is captured by a econometric model. Some analyst have suggested that economic fundamentals in Australia justify the level of house prices.

oh dear, bull with a scant grasp of economics, rather not really knowing the importance of basic valuation fundamentals and principles of reversion to the mean, plus how that happens

you're in for a hell of a ride sucker, will be fun watching you and those like you

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(...) I see a small decline to small rise in London house prices. Maybe 5% decline- worst case scenario

So you think high housing costs = good. Low housing costs = bad.

Care to explain why?

(Before replying, please see my forum signature, below.)

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The inflation numbers due tomorrow will be instructive. You can't QE with CPI over twice target. We're currently paying the price for QE1. Starting QE2 while riding the QE1 inflation wave would be suicidal. Remember, QE1 happened during a period of below-target inflation. No such benign situation exists at the moment.

By the way, when will the GDP Q2 number be published?

Rumours that it will be near zero, or even negative.

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The inflation numbers due tomorrow will be instructive. You can't QE with CPI over twice target. We're currently paying the price for QE1. Starting QE2 while riding the QE1 inflation wave would be suicidal. Remember, QE1 happened during a period of below-target inflation. No such benign situation exists at the moment.

Spot on. Also it's worth bearing in mind that QE1 is still ongoing, as the BoE are 'maintaining the assett purchase program at £200 Bn', ie they print in line with debt redemptions at the moment. They could up the printing with no more than a one-liner in the meeting results by upping it to £250 Bn or something. Scary stuff.

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Long term, house prices will rise and house prices will fall. New lows, new highs, depending on how you measure house prices that is.

Who cares?

A house is but bricks and mortar or steel and board with a bit of concrete, perhaps even a hammock and some tarpaulin.

In a civilized society everyone should be able to have a house of some sort.

Structural homelessness, structural unemployment, there is no point.

1930s semi's are some of the best commoner houses on the market.

How much time did it take to build them, how many hours of labour were involved in the construction? As a proportion of a 40 hour week. Half a years work!

25 years of debt slavery for a multi-cuboidal structure that takes half a year of a working mans labour to build using 1930s technology.

Housing is cheap, DIRT cheap, it's just restricted and regulated heavily.

Kind of like prohibition in America, instead of batches of dodgy brandy and Al Capone we have slum lords and increasing numbers of people living in sheds/on the streets.

Prohibition led to high crime (gangsters getting murdered), the current housing situation leads to rich men protected by the state extracting the fruit of the labour of the many that live in poverty.

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....if a house is bought and sold many times over its lifetime, think how many times it was paid for?

Sold for £500 when it was built.

Sold for £300,000 today.........how many times has it been sold and how much it total was spent on it overall...answers on a postcard. ;)

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The inflation numbers due tomorrow will be instructive. You can't QE with CPI over twice target. We're currently paying the price for QE1. Starting QE2 while riding the QE1 inflation wave would be suicidal. Remember, QE1 happened during a period of below-target inflation. No such benign situation exists at the moment.

western bond markets may be about to go nuclear, race to the bottom of sovereign debt

in other words the govt may choose QE again in an act od last ditch need to inflate away govt debt, my guess anyway

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western bond markets may be about to go nuclear, race to the bottom of sovereign debt

in other words the govt may choose QE again in an act od last ditch need to inflate away govt debt, my guess anyway

You will never inflate away government debt...they will have to continue spending, all they can hope to do is spend even more, that is the system we are having to live with....until such time it changes. ;)

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You will never inflate away government debt...they will have to continue spending, all they can hope to do is spend even more, that is the system we are having to live with....until such time it changes. ;)

they're doing quite a good job inflating away public sector salaries right now...

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in other words the govt may choose QE again in an act od last ditch need to inflate away govt debt, my guess anyway

Except it's not working becuase we're getting the wrong sort of inflation.

Raw material and benefit costs are going up but wages and tax revenues are stagnant.

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(...) Those in L and the SE (...) The best you can reasonably expect is 30% nominal by 2013/14. (...)

Nominal?! I do hope you are right. But I am losing faith. I think 30% real by 2013-14. Though I will be very very happy to be proven wrong, of course. (I am a private tenant.)

When they announce more money printing that may well be the next buy point.

I didn't understand this. Last week we had rumours of more QE, and I suspected that the GDP numbers will be very bad indeed. if they come below zero, we may have more QE in the next few months. How could this be a buy signal, if you expect 30% nominal falls in the next 2 or 3 years? I guess you think more QE would come only by then?

Overall those areas which have fallen the least so far will now fall the most

+ 1

but the most is not likely to be huge.

But 30% nominal in 2-3 years IS huge. It would be around 40% real!

Expect 40-50% real fall by end of decade. (...)

Now I agree with you.

In the meanwhile we are in leg 2 down which will stop with printing #2. Leg 3 down will start when UK needs to repay debt in c 2016 or so.

(...)

Thoughts?

I see. OK, I think I agree with that. Printing feeds banks' lending and stops nominal falls. Yes. I think where we differ is that I don't think the Gov.+BoE+Banks would allow a 30% nominal fall before starting to print. I think if we have a series of monthly falls above 1%, in less than 6 months they would start printing. And I think they will not allow a double digit nominal annual fall, for political reasons, and also to avoid markets' panics. I reckon their ideal scenario would be a 10% real fall/year, half masked by inflation, 5% / 5%, exactly what is happening right now.

Edited by Tired of Waiting

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Just imagine how things would be if those who couldn't afford to buy food we're left to die in the street.

Housing is no different. If you can't afford shelter, you are also left to die in the street.

What a sickening country this is. :rolleyes:

Edited by Wait & See

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they're doing quite a good job inflating away public sector salaries right now...

well, apart from payscales and pension top ups....

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Just imagine how things would be if those who couldn't afford to buy food we're left to die in the street.

Housing is no different. If you can't afford shelter, you are also left to die in the street.

What a sickening country this is. :rolleyes:

I was thinking earlier of yellow stone park where they killed off all the wolfs. They found that all the live stock started looking very unhealthy. So they re introduced the wolfs. Maybe I should loose a few stone and get fit.

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  • 298 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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