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AntiSpeculator

Back Me Up Guys

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As far as I'm concerned a correction/ crash is long overdue.

Maybe I'm being a bit too pessimistic but today I feel like even if there was a crash in house prices I wouldn't be any better off because...

1. The economy will go down the toilet and I will lose my job and therefore be unable to buy the home I want.

2. As a result of 1 - hyper-inflation will erode the value of my hard saved deposit meaning I am less able to afford the home I want.

3. Banks / Building societies will sh!t themselves and stop lending unless you have a 50% deposit thus meaning I still can't afford the home I want.

4. Banks / building societies will try to recoup the cost of bad debt caused by the housing bubble and this cost will inevitably be passed on to all customers, rather than concentrated on those that caused the problem. This means I will end up with less money to spend and I won't be able to buy the home that I want.

5. The government will be forced to raise taxes to fix the black hole in public spending caused by poor economic growth (well, recession) meaning that I am less able to afford the home I want.

End situation not too dissimilar to current situation :(

Back me up guys... It's going to be OK isn't it? I'm going too far here aren't I?

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As far as I'm concerned a correction/ crash is long overdue.

Maybe I'm being a bit too pessimistic but today I feel like even if there was a crash in house prices I wouldn't be any better off because...

1. The economy will go down the toilet and I will lose my job and therefore be unable to buy the home I want.

2. As a result of 1 - hyper-inflation will erode the value of my hard saved deposit meaning I am less able to afford the home I want.

3. Banks / Building societies will sh!t themselves and stop lending unless you have a 50% deposit thus meaning I still can't afford the home I want.

4. Banks / building societies will try to recoup the cost of bad debt caused by the housing bubble and this cost will inevitably be passed on to all customers, rather than concentrated on those that caused the problem. This means I will end up with less money to spend and I won't be able to buy the home that I want.

5. The government will be forced to raise taxes to fix the black hole in public spending caused by poor economic growth (well, recession) meaning that I am less able to afford the home I want.

End situation not too dissimilar to current situation :(

Back me up guys... It's going to be OK isn't it? I'm going too far here aren't I?

I have to sympathise, cos I too worry about the above, esp inflation going up without a corresponding increase in IR's, which will erode my hard earned deposit.

Really consider putting your money into inflation proof assets. Consider a portfolio of stocks of blue chip companies who are not leveraged too much and do well no matter what the economy...ie drugs firms. Chuck in some gold and uranium for good measure and maybe some cash spread across a range of currencies.

I must admit I have not put the above plan into effect, but I can feel the nagging getting stronger from my inner voice.

Come the trough you will find it very psychologically hard to buy a place when everyone else is trying to sell to liberate cash and get out of debt.

Be strong, be brave, take expert advice from a range of people, get a plan together, but be prepared to change your opinions/predictions for the future economic events.

Be prepared to stick it out for the long haul. We would all like to see a short sharp shock correction so that we can find a place to live in the next year or two, but the downturn may be a lot more protracted. Prepare for the next 5 years just in case.

James.

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Guest

I think your concerns are quite optimistic, considering the material that has been published on this site to date. Some people on here are predicting the entire collapse of paper currency.

Well, if THAT happens, then we're all going to be affected in some way. So I take a less apocalyptic view.

Crash long overdue?

The action plan right now is to keep an eye on what's happening in your local area. In my bit of south manchester it's total stagnation at the bottom of the market. No asking price increases in the 9 months I've been watching. Next to no sales (I know of four out of tens on rightmove). Some minor pricing down. At the very top of the market £750K detatcheds are pricing down to £650K without sale. Any vendor who hasn't shifted their house in three months is a time-waster. There is a buyer for every good/bad/ugly house, just as long as the price is right.

If you stay out of the market, find somewhere else for your savings, perhaps in addition to the HSBC savings account! Might make you feel happier, at least.

Over time, if you feel that your local area is still taking the piss with prices, consider moving to another area of the country where the fights are going on, and prices are coming down. Yes, this is something that the NIMBYs don't factor in.

Your point (4) seems to be already happening, with reports of some lenders not passing on base rate cuts, and Barclaycard raising their rates. You will be able to buy though if the credit-squeeze keeps FTBs out of the market at the current prices. That'll precipitate the crash, and you buy a cheaper house at a slightly higher mortgage rate like in the old days. I think cheapness of prices is important now because there is very low wage-inflation compared even to the last crash.

My personal theory is that the Government / Bank Of England are secretly against home sellers right now. Ok, this is a conspiracy theory I know, but if you look, the evidence is all there.

The bank lowered interest rates from 6.75% -> 3.75% to stimulate growth and to compete with the USA that had slashed its rates to prevent recession. This 'spare' money inflated property prices, whereby home owners fully priced in the halving of rates by doubling prices (and then some).

Merv and GB realised that the shit's gonna hit the fan with over-borrowing and bankruptcies. They must maintain the value of sterling, bankruptcy undermines this aim. They also didn't want to do anything that looked like the policy decision of the Major government's famous interest rate spike. So the BOE carefully raise rates to 4.75% during the boom, to switch it off. This action left house prices about 20% over-valued on price fundamentals alone (since wages have done basically nothing). The Government and BOE knew that this would cause stagnation for a year or so, after which the market forces of 'fear and greed' would bring the market down: Greed of buyers, fear of sellers never getting a sale. All very neat, coz the bank and govt don't get the blame for anything obvious.

Also, John Prescott's cheap houses for hard working key workers. Hmmm. 200,000 promised originally. These haven't appeared. Mysterious? Well, he cut it to just 20,000 provision. Then a few months ago the govt met with some lenders, and made the terms so difficult for the lenders that two major ones walked away from the deal. Conspiracy against first time buyers? No. It's just the damn houses weren't needed in the first place in light of the above. It's just that the government need to spin some kind of 'we're helping first timers, honest' line.

Things might not be as bad as you think.

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dont worry. none of this happened last time. just the bloated fat gets cut back and the economy goes back to 2001. only the people left holding the debt have to pay it back over the long term - hands burned. banks - hands burned.

the high street will be like it is now. quiet, but functioning. no debt fuelled boom.

some job cuts, but not like the 1981 job. trim the fat and the tat.

its when gordon brown messes with the IR that risks deep recession, because hes sacrificing the risk of inflation to prop up a boom that makes him look like number 10 material when he isnt.

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Guest Charlie The Tramp

Nice post fred, brings back memories of how life really was then.

As you say not like 1981 the period of lost hope when you were over the wall at 35 years of age, and the future for millions looked very bleak.

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I am still convinced that this bubble has been caused, apart from by the lenders, the EAs and the politicians, in the main by a small but significant number of people getting into BTL and hence driving up the prices to ridiculous levels.

I know so many people now - people whom you would not think were capable of doing so - who now have a second or third property which they are aiming to rent out. It has almost become the 'norm' much in the same way many couples have a second car.

It is sheer nuts but, when the crash occurs and the dust happens, I do believe we will see that the numbers involved in creating the bubble, whilst significant, will be by no means in the majority.

If I am correct then, whilst the correction will be painful and have much wider financial reprecussions, it will not be the end of the known Universe as we know.

Be happy, be positive :)

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CRASH LONG OVERDUE... ?

I hear this from people who do not understand market dynamics.

The slide takes time to get started, and when it does it takes months and years to reach bottom.

It only looks like a "Crash" in hindsight. At the time, it is a frustrating period where weak demand,

and multiple false dawns wear out the Bulls, and gradually conver them into Bulls- at least that is

how it seemed last time around.

If you are going to talk about "overdue crashes", then why not define what you are expecting

rather than trying to put words in the mouths of the serious observers of market dynamics that

hang out here. So why not:

+ Tell us what you mean by a crash. (I say a period of 1%+ monthly falls in property prices),

+ Tell us why you think is should come quickly, rather than being drawn out over several years,

(My website: http://www.HousePriceCycle.com talks about a possible cyclical low in 2008-2010)

+ Actually bother to read some of the serious forecasts that have been made here,

(I EXPECT "crash-cruise-speed" of 1%+ per month, to start by year end 2005, but will not mind

if it is delayed by months, because it is substantially cheaper to rent. And I am not missing out

on anything as long as prices drift sideways/lower, andmy savings continue to rise.)

//Note: I am typing virtually the same text for the 5th or 6th time,

so in future I will save this written on 9.Oct.2005, and just do "cut-and-paste"//

Dr Bubb I think you have a couple of typing errors:

"Bulls, and gradually conver them into Bulls- "

should this be

"Bears, and gradually convert them into Bulls- "

Only mentioned it because you mentioned cut and pasting copies of it...

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'If you are going to talk about "overdue crashes", then why not define what you are expecting

rather than trying to put words in the mouths of the serious observers of market dynamics that

hang out here. So why not:'

I realise there are market dynamics and factors underpinning prices - there is always a reason for everything (except for Vernon Kaye).

Sorry for ruining it for the serious observers of the market.

'Overdue' is merely a personal oppinion (shocked intake of breath from the audience) based upon the fact that neither myself nor anyone I know have been able to afford afford to buy a house for a prolonged period of time (at least 4 years) which seems strange considering the age and income bracket of these contemporaries and historical trends. This situation has persisted for several years and confounded many seasoned observers.

I will be more careful in future before bandying emotive words like 'overdue' around.

I do not necessarily expect a quick correction - hence being worried about savings being erroded in the medium term. I have, however, been surprised by how long the prices have risen for.

By crash/correction I think at least 20% off current prices. Either by inflation or actual price falls, but probably by actual price falls considering the amount of speculation that has occurred.

I don't know when this would happen, however, but I think we will see serious movement (1% per month) start sometime in 2006 as we are seeing the market turn this year.

If that's ok.

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I think Bubb has a good understanding of the 'crash' and his prediction of the stock market slump was absolutely spot on. Names not 'Nick Leason' is it Bubb? :lol:

There is one area that worries me though. I can see a lot of housing selling for a lot less than the 1% per month drop. The question is then: When you say 1% drops p.c.m. are you saying Reported drops of this amount - or real term drops in selling prices?

TB

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For someone in your position -batten down the hatches: save save save! And put lots of dosh in the bank. Nice and simpke and secure and gaining above inflation interest!

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We see that when houseprices stop rising, and doing some peoples saving for them, that there is less consumption spending in the economy as people start to save.

More and more of peoples spending is now on rising costs, like energy/petrol, water, food and clothing, and local and government taxes leaving less spending for other things.

Millions of non jobs have been created to mop up unemployment.

Are we in for a slump? Government policy seems to be determined to divide society into landlords and tenants.

You are to be scanned by the government for the national population database and ID cards in 2008.

Edited by brainclamp

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  • 301 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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