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willing

The Evidence?

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Just wondered where everyone thought we were in the stagnation/crash/boom argument. My personal thoughts are (based on evidence to date)

Continued Boom:

Uber Bulls who believe house prices will rise forever are now discredited under current evidence and have now disappeared or changed to 'optimists' suggesting stagnation.

Stagnation:

Gradual declines or rises are the trend currently and taking the last year at face value could be a likely senario for the future. Every month that goes by without a significant downturn in the HPI figures increases the strength of this argument.

Crash:

The scientific data and logical arguments still support the case for a crash, but we have to face the fact that there has been no significant downturn in HPI this autumn as expected. Every month that goes by without a downturn weakens the crash argument further.

So who has the right senario and the crystal ball? On balence I think the Crash protagonists still look the most likely, but only just. We bears have to be honest and say that every day that goes by without a turn down in the HPI fugures strengthens the argument for a stagnation senario.

On the plus side I haven't heard any tradition bull cries such as 'buy now or be priced out forever' for a loooooong time

:lol:

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Just wondered where everyone thought we were in the stagnation/crash/boom argument. My personal thoughts are (based on evidence to date)

Continued Boom:

Uber Bulls who believe house prices will rise forever are now discredited under current evidence and have now disappeared or changed to 'optimists' suggesting stagnation.

Stagnation:

Gradual declines or rises are the trend currently and taking the last year at face value could be a likely senario for the future. Every month that goes by without a significant downturn in the HPI figures increases the strength of this argument.

Crash:

The scientific data and logical arguments still support the case for a crash, but we have to face the fact that there has been no significant downturn in HPI this autumn as expected. Every month that goes by without a downturn weakens the crash argument further.

So who has the right senario and the crystal ball? On balence I think the Crash protagonists still look the most likely, but only just. We bears have to be honest and say that every day that goes by without a turn down in the HPI fugures strengthens the argument for a stagnation senario.

On the plus side I haven't heard any tradition bull cries such as 'buy now or be priced out forever' for a loooooong time

:lol:

sorry... I am being offered flats at 20% less then they were last year..

Average selling price does not reflect average properties.

I see the crash.. higher interest rates are ont heir way.

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Guest Time 2 raise Interest Rates

We bears have to be honest and say that every day that goes by without a turn down in the HPI fugures strengthens the argument for a stagnation senario.

:lol:

May have got hold of the wrong end of the stick here, but every survey

Nationwide, Halifax, Rightmove, Hometrack, etc, are all saying that house

price inflation is down 90-95% yoy.

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Guest growl

Its a bit like an avalanche, when at first you see the odd pebble faling past you, then nothing. Then a few rocks, then maybe not much happening. Then a big roar... :blink:

Can we say after Xmass. :)

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sorry... I am being offered flats at 20% less then they were last year..

Average selling price does not reflect average properties.

I see the crash.. higher interest rates are ont heir way.

..and higher unemployment in the New Year when the retail sector starts shedding jobs. We are at the beginning of a new cycle, consumer spending down, unemployment will rise, consumer spending will fall further etc etc.

If we don't enter a recession here next year then the US will take us there within the next few years. I reckon they are 1-2 years behind us with their housing market. When that comes off the rails and the US consumers stop spending a global recession is inevitable. Also consider that US inflation is now nearly 5% and wage inflation is probably considerably less plus extra costs they are experiencing due to rising IRs. It won't be long...

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The scientific data and logical arguments still support the case for a crash, but we have to face the fact that there has been no significant downturn in HPI this autumn as expected. Every month that goes by without a downturn weakens the crash argument further.

I can't say that I agree with this, I think we are already seeing the start of the downturn and the fact that it is coming in a little later than expected does not IMO undermine the argument in favour of price falls.

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Stagnation:

Gradual declines or rises are the trend currently and taking the last year at face value could be a likely senario for the future. Every month that goes by without a significant downturn in the HPI figures increases the strength of this argument.

Stagnation is being described in the media as the best solution for all, I'm not so sure.

I think it's a situation that could easily turn downwards with a few IR rises or economic problems. Stagnation would have to continue for 10 years or more for homes to become reasonably priced. This is a long time and the chances of economic issues creaping in during this time seems high IMO, whether they effect individuals/communities or the UK as a whole. On the other side of the coin, prices could rise again after a few years, making property even more unaffordable.

Therefore IMHO I believe a crash is the only real option, stagnation will, one way or another, make the situation worse by delaying it, so debt will grow further and HP's will be even more out of reach. The sooner it happens the easier it will be.

Edited by laughing_goat

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Stagnation is being described in the media as the best solution for all, I'm not so sure.

I think it's a situation that could easily turn downwards with a few IR rises or economic problems. Stagnation would have to continue for 10 years or more for homes to become reasonably priced. This is a long time and the chances of economic issues creaping in during this time seems high IMO, whether they effect individuals/communities or the UK as a whole. On the other side of the coin, prices could rise again after a few years, making property even more unaffordable.

Therefore IMHO I believe a crash is the only real option, stagnation will, one way or another, make the situation worse by delaying it, so debt will grow further and HP's will be even more out of reach. The sooner it happens the easier it will be.

I don't really see long-term stagnation as possible. I feel that UK house prices still have the "growth premium" on them - that is, a percentage of the price that someone is prepared to pay because the asset is going up in value.

It is similar with the shares of fast growing companies, these are on higher PERs because the market is prepared to pay for the prospect of future growth. Once a company goes ex-growth (like property has now), the PER has to fall to more normal levels and the growth premium is lopped off the price.

This all happens relatively quickly in the stock market. However, the property market is slow and illiquid and takes many months to find a new trend.

This is why that, when a market in any asset - shares, bonds, commodities, property or whatever has seen stellar growth over a long period, it doesn't just suddenly stop growing and plateau off. Can anyone think of a market that has achieved this? Yet economists are queuing up to predict the soft landing. It doesn't sound like common sense to me.

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May have got hold of the wrong end of the stick here, but every survey

Nationwide, Halifax, Rightmove, Hometrack, etc, are all saying that house

price inflation is down 90-95% yoy.

Yes but that doesn't necessarily mean a crash. HPI could be down to 0% or -5% and that would not be a definition of a crash in my book. I'm looking for evidence of a developing 10-40% yoy HPI drop. If HPI drops massively form 20% per year to between +5 and -5% yoy that just shows we're either going to have a crash or a stagnation. Granted I think it's dropping way too fast for stagnation but it is still a likely outcome. The trouble is the longer it is before we see a crash developing the more likely it is that the sheeple will decide one's not happening :angry: - sentiment is as they say everything in stagnation senarios

Why?

See reply above + if (like me) you've been saying we'll see a crash and you've been saying it for the last 2 years, at some point you have to realise that you might actually be the one who's got it wrong. It's no use winning the Crash argument if you've put off buying a house or STR'd 20yrs ago on the premise of a forthcoming crash that didn't materialise until 2024. Bears can be shown to be fools as well as bulls, and sometimes our 'bear' logic may be sound but the actual reality is insane so things don't work out how we expected them to.

Edited by willing

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Yes but that doesn't necessarily mean a crash. HPI could be down to 0% or -5% and that would not be a definition of a crash in my book. I'm looking for evidence of a developing 10-40% yoy HPI drop. If HPI drops massively form 20% per year to between +5 and -5% yoy that just shows we're either going to have a crash or a stagnation. Granted I think it's dropping way too fast for stagnation but it is still a likely outcome. The trouble is the longer it is before we see a crash developing the more likely it is that the sheeple will decide one's not happening :angry: - sentiment is as they say everything in stagnation senarios

See reply above + if (like me) you've been saying we'll see a crash and you've been saying it for the last 2 years, at some point you have to realise that you might actually be the one who's got it wrong. It's no use winning the Crash argument if you've put off buying a house or STR'd 20yrs ago on the premise of a forthcoming crash that didn't materialise until 2024. Bears can be shown to be fools as well as bulls, and sometimes our 'bear' logic may be sound but the actual reality is insane so things don't work out how we expected them to.

If we accept that a crash/downturn will happen at some unspecified point in the future, then with every year that it does not occur, it becomes more likely to occur the following year. Given that we have just had a massive boom (no-one could deny this) then the only remaining question is whether the market can sustain a long period of stability - at the higher "plateau" level. Historically, this is unheard of in any market, not merely housing.

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Guest Time 2 raise Interest Rates

Yes but that doesn't necessarily mean a crash. HPI could be down to 0% or -5% and that would not be a definition of a crash in my book. I'm looking for evidence of a developing 10-40% yoy HPI drop. If HPI drops massively form 20% per year to between +5 and -5% yoy that just shows we're either going to have a crash or a stagnation.

willing As you said in your opening post, "Every day that goes by

without a downturn in the house price inflation figures strengthens the

arguement for stagnation."

So house prices peaked Summer 04 and since then HPI has dropped

from around 20% per year depending on what index you use to nearly

0%. Going on these figures, if HPI keeps falling at the same rate as the

last year, this time next year house prices should have dropped by about

15-20%. A fair assumption, wouldn't you say?

Edited by Time 2 raise Interest Rates

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Willing

Why did you say "every month that goes by without a downturn weakens the crash argument further."

That is like saying that every year that a tree does not fall over weakens the falling over arguement further.

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Guest Bart of Darkness

Willing

Why did you say "every month that goes by without a downturn weakens the crash argument further."

That is like saying that every year that a tree does not fall over weakens the falling over arguement further.

Or that every year that goes by and I don't die, the less chance there is of me ever dying.

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willing As you said in your opening post, "Every day that goes by

without a downturn in the house price inflation figures strengthens the

arguement for stagnation."

So house prices peaked Summer 04 and since then HPI has dropped

from around 20% per year depending on what index you use to nearly

0%. Going on these figures, if HPI keeps falling at the same rate as the

last year, this time next year house prices should have dropped by about

15-20%. A fair assumption, wouldn't you say?

That's precisely what I'm hoping will happen, and I hope we are just experiencing a resistance point at 0% ish. However, I would personally have expected HPI to drop like a stone at this time of year as it did during last crash. What I was expecting to see was large drops in the autumn followed by small gains in spring followed by large drops. . .etc. That isn't happening yet, but that was the cycle of last crash.

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Willing

Why did you say "every month that goes by without a downturn weakens the crash argument further."

That is like saying that every year that a tree does not fall over weakens the falling over arguement further.

More like looking at a rotten old tree in Summer and saying 'That's going to fall this winter in the winds'. You then return 3 years later and the rotten old tree's still there! You of course know that it has to fall over someday, but you probably initially underestimated it's strength. Perhaps it's been lucky and will fall over next month. but far more likely it has a strong, not rotten core, which you can't see and never guessed was there hiding deep inside.

Or that every year that goes by and I don't die, the less chance there is of me ever dying.

Or to use your analogy a doctor looking at a patient and saying you've got six months to live. 5 years pass and the patient is still alive. What are the chances that the doctors original diagnosis was wrong? It's simply not enough to say 'Oh he'll die someday', we all know that! but will it be when he's 70 or next year is the question.

What I'm saying is we cannot presume, we have to after a period of time start to question ourselves. How long that should be I don't know, but every day without a worsening in the HPI leads us further along the path to the conclusion that, like the doctor, we might have made the wrong diagnosis. Not a very palitable thought. . .

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The market if fundamentally cyclical - there is no reason to sugest that this has changed.

I think we have crossed the maxima and are now creeping downwards.

The market appear to be quite slow, but there exceptions, a colleague just sold a tidy 1980s two bed in good condition in a good area for full (claimed) asking price after three weeks to a FTB (not me) for £130K.

Has done well, bought it for about £65k four years ago.

Lots of ecconomic indicators aren't looking too clever, unemployment is creeping up, repossessions are creping up. Another colleague who's got a few BTLs is now viewing repossessions, he couldn't do that this time last year.

It on the way but we still have some time to wait. Hold on and pour every penny into the bankfor your deposit.

Think Thrift!

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Yet economists are queuing up to predict the soft landing. It doesn't sound like common sense to me.

It's the VIs who are predicting the soft landing. Many economists are predicting a crash.

frugalista

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It's the VIs who are predicting the soft landing. Many economists are predicting a crash.

frugalista

I am probably out of date by now, but when I did a bit of research on this about 6 months ago it was around a 50/50 split. Having said that, a lot of the economists that predicted gradual rises/stagnation (the really optimistic point of view at the time) seemed to be pretty much VI sponsored. Likewise the few predicting total doom and huge crashes appeared to have books coming out on 'how to survive the coming crash' and the like.

The best I could say at the time was that no one seemed to have a clue! :unsure:

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What I'm saying is we cannot presume, we have to after a period of time start to question ourselves. How long that should be I don't know, but every day without a worsening in the HPI leads us further along the path to the conclusion that, like the doctor, we might have made the wrong diagnosis. Not a very palitable thought. . .

I would have said it was more or less exactly on schedule myself. Ten years of gain, five of slump. What did you expect, to walk out the door and suddenly find everything 50% cheaper? Whatever, even the most rose tinted risk analysis would say that to consider buying a house just now would be rash.

Edited by jellybean

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I would have said it was more or less exactly on schedule myself. Ten years of gain, five of slump. What did you expect, to walk out the door and suddenly find everything 50% cheaper?

Nope, but I would hope to see a significant worsening over the next 2 years - theoretically the end of the first year of HPI drops should have one of the higest MoM drops in the whole crash. We should have come off the top (summer last year) into 10 or so months of nail-biting denial and now during the winter months be seeing panic set in. I'm in the south, commuter belt, and so should be seeing the first effects of this by now and sadly I can say that nothing appears to have dramatically changed in the HPI stakes. Everything is static.

I don't expect to see a crash happen overnight, but if we're not seeing significant MoM falls by middle next year, as opposed to the pifiling 0.1%'ers, I can't see a crash happening. Maybe a plop, but not a crash. Wish it weren't so but that will be my position as I believe you cannot keep on saying a crash is around the corner for ever. For the moment though it's time to keep the faith!

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I don't expect to see a crash happen overnight, but if we're not seeing significant MoM falls by middle next year, as opposed to the pifiling 0.1%'ers, I can't see a crash happening. Maybe a plop, but not a crash. Wish it weren't so but that will be my position as I believe you cannot keep on saying a crash is around the corner for ever. For the moment though it's time to keep the faith!

I think you are expecting to much. It's a stochastic process. However it is not completely random and baring exceptional catastophic events will in all probablity (literaly) follow more or less the course of events hypothesised by those who have analysed the data.

The last three cycles have shown a clear 15 year periodicity. It would be very surprising to me if the same course was not followed. So far events have not deviated significantly from the model. I think you have to be dispationate about it and not let you're emotions rule.

Edited by jellybean

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I am probably out of date by now, but when I did a bit of research on this about 6 months ago it was around a 50/50 split. Having said that, a lot of the economists that predicted gradual rises/stagnation (the really optimistic point of view at the time) seemed to be pretty much VI sponsored. Likewise the few predicting total doom and huge crashes appeared to have books coming out on 'how to survive the coming crash' and the like.

The best I could say at the time was that no one seemed to have a clue! :unsure:

Okay, well since then there has been a lot of more bearish articles from much more mainstream economists, especially The Economist magazine. I think there are some links to this on the main page.

frugalista

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if the last crash is anything to go by,than we are probably at about 1989....VI's still trying to pump the last dregs out of the market,but unemployment and slowing high street spending are taking their toll on confidence.

....we all know what happened from 1989-1992 don't we!!

...if I'm right there will be a few more nasties thrown into the mix this time like war with Iran and a resultant oil shock.(possibly another terrorist attack too)

...sorry it sounds a bit doomsday,but read nostradamus and the torah and 2006 does not shape up too well.

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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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