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Has The Market Built From Bricks And Mortar Reached A Fragile Peak Or Is It Really A Plateau?

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http://news.independent.co.uk/business/com...ticle318154.ece

Has the market built from bricks and mortar reached a fragile peak or is it really a plateau?

The late 1980s boom in the UK was mirrored by a similar one in Australia, but the Aussies managed to scramble out without any significant fall in prices, whereas we dipped well below the waterline.

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The author of this article thinks that prices have moved to a new plateau. We will see about that. :angry:

I hope our Dr. Bubb is right and the Independent is wrong.

Edited by Warwickshire Lad

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The author of this article thinks that prices have moved to a new plateau. We will see about that. :angry:

I hope our Dr. Bubb is right and the Independent is wrong.

Stocks have reached what looks like a permanently high plateau.

http://www.thatsweird.net/gaffes_blunders3.shtml

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Personally, I think that the UK Property market has been slowly drifting lower, waiting for a catalyst which will trigger a sharper slide. I have said, I continue to say, that I believe that a sharper slide of "1% per month or more" will begin by the end of the year. I may be wrong about that, and that slide may come a few months later, but the year is far from over. And it is very clear to me that so long as the market is drifting sideways or sliding at 1% monthly, it is smarter to rent. Only if house price were shooting up, would it be sensible to own.

As an FTB this exactly what I figured. Even if the market is going sideways, it may be better to stay out of it until the market starts rising again, it becomes good value compared to renting and simply from a risk point of view it seems better sense to stay out of the market for now.

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I agree with the point about needing a trigger. Something like 9/11 now would trigger more than just a housing crash. You forgot to mention bird flu, which in my mind presents a huge threat to our economy. Even if only a few thousand people died (upper estimates are above 10% of the population), the lack of economic activity due to curfews could precipitate the economic collapse.

I look at it like a huge overhang of snow high up in the Alps. It looks like its about to fall, and it may indeed fall under its own weight, but more likely a loud noise, or stray skier will send it plummeting into the valley. Your gut instinct tells you, that whatever happens, it won't hang around all winter, then gently melt as spring approaches. It will come crashing down.

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That Fisher quote is an old classic

Want to know what happens after Plateaus?

The article amused me, as the graphs used to illustrate the case (in the print version) were patently heading down.

Who knows, though? It might plateau? Only it's never done that before. I think people really underestimate the power of sentiment in the property market, which is surprising given that we've all lived through a dot-com boom fuelled almost entirely by sentiment.

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Black Tuesday

On October 20th, 1929, the noted Yale University economist Irving Fisher declared that "stock prices have reached what looks like a permanently high plateau." Nine days later (October 29th, 1929) "Black Tuesday" arrived; the stock market crashed and America and the world were plunged into the worst recession in history.

[in Fisher's defense, share prices were not terribly inflated. Corporate profits were rising and, even at the peak, the average ratio of share price to profits was only 16 — unprecedented then, but modest by today's standards.]

[Trivia: "Each year," the Economist reported in 2004, "our economics editor conducts an informal poll of a select group {of America's top economists} who meet for drinks after dinner {at the annual symposium of the Federal Reserve Bank of Kansas City in Jackson Hole, Wyoming}. At the peak of the stockmarket boom they were asked: 'Is this a bubble?' 'No,' they confidently voted. In 2001 they ruled out an American recession and last year they predicted that interest rates would not fall to 1%. In short, they provide an excellent contrarian indicator."]

The Economist

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large makes a really good point.

forget about terrorist attacks decimating markets.

the last flu pandemic wiped out as many people as had died in WW1....I think it was about 15 million.

makes 9/11 look like a picnic doesn't it?

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I read this article while having breakfast with some friends in a cafe. They probably thought I was quite rude for ignoring them and getting engrossed in the paper :lol: The graph showing global house price movements since 1985 (ish?) made me chuckle for several reasons:

Firstly if it had shown a period back to the early 1970's then it would have been plain to see that the housing market in recent decades has shown a clear pattern of cycles.

Secondly the article was asking whether we could indeed have reached a plateau. Hmm well there was not one timeframe in the graph which has ever shown a plateau previously.

Thirdly The correlation between the housing market in Australia and in the UK was shockingly consistent: Australia was now showing as negative HPI.

Fourthly the story seemed to sum up by saying we could well have managed the plateau... the graph showed current prices nosediving.

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the last flu pandemic wiped out as many people as had died in WW1....I think it was about 15 million.

This has really got the west on the run....I think they are currently more concerned with this that terrorism

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This has really got the west on the run....I think they are currently more concerned with this that terrorism

....I don't think the UK govt. are really that bothered to be honest.personally I think they see a lack of action and subsequent deaths of the infirm and elderly as a cheap cop-out from all that pension money they would be paying out as the boomers retire.

cynical,but probably accurate.

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....I don't think the UK govt. are really that bothered to be honest.personally I think they see a lack of action and subsequent deaths of the infirm and elderly as a cheap cop-out from all that pension money they would be paying out as the boomers retire.

cynical,but probably accurate.

Medically wrong I'm afraid. everyone assumes that the flu will kill the elderly and the young. Actually influenza has a bi-modal lethality. some strains kill the elderly and young, the others kill those in the middle. The incidence of these two is historically 50/50. It just so happens that the last two epidemics have been the young and elderly type. Toss the coin in your pocket to see whether house prices will have any relevance for you if there is an epidemic. The most sought after real estate may well be in the church yard.

The combination of the economic impact of high oil prices and a massive epidemic would be serious. Particularly in countries living on debt.

There is quite a lot of flu preparation activity going on behind the scenes in the NHS. Trouble is it is predicted that an outbreak in China would take two weeks to become an outbreak in the west. It takes 6-9 months to develop a vaccine.

Edited by uro_who

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There is quite a lot of flu preparation activity going on behind the scenes in the NHS. Trouble is it is predicted that an outbreak in China would take two weeks to become an outbreak in the west. It takes 6-9 months to develop a vaccine.

was speaking to a friend last night who is a district nurse - they are currently planning for vaccinating the whole population when required (that is 'when', not 'if') - as uro_who says, this could take anyone, not just the old and frail etc. - the problem is, until they know the strain, they can't guarantee the vaccine will be right - it's quite possible we may have a surplus of houses after a while

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Medically wrong I'm afraid. everyone assumes that the flu will kill the elderly and the young. Actually influenza has a bi-modal lethality. some strains kill the elderly and young, the others kill those in the middle. The incidence of these two is historically 50/50. It just so happens that the last two epidemics have been the young and elderly type. Toss the coin in your pocket to see whether house prices will have any relevance for you if there is an epidemic. The most sort after real estate may well be in the church yard.

The combination of the economic impact of high oil prices and a massive epidemic would be serious. Particularly in countries living on debt.

There is quite a lot of flu preparation activity going on behind the scenes in the NHS. Trouble is it is predicted that an outbreak in China would take two weeks to become an outbreak in the west. It takes 6-9 months to develop a vaccine.

I'd certainly agree with this...and don't the WHO have a global strategy on this that most countries have alrady subscribed to and are working on?

The USA have focused on this and have worked out the economic impact of this.

They are taking it seriously

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What a load of tosh, who benefits from a country where large swathes of the population are either in debt because of high prices or priced out of having a home?

A fall in house prices will be for the long term benefit of the UK. Any economic fallout will be a result of high prices in the first place and people having borrowed more than they should have, rather than falling prices.

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I suspect house prices have moved to a new plateau, rather than scaling a peak from which they will plunge. That would be good news for homebuyers...

er - no it wouldn't! The plunge is better for homebuyers - their houses will cost less. This is a no-brainer isn't it?

Edited by r thritis

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  • 302 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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