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Bagehot

We Were Wrong, No Hpc For Another Year!

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I have decided to forget about any HPC for another year and even then it wont be a great crash. The best we can hope for is a slow decline. I am dismissing any crash and will analayse the situation in a year. The best we can hope for is that the economy takes a dive....but I think it will take another 2 years before this is in full flight as public spending is still too strong.

I thought we'd be in a full decline in prices by now but its obvious nothing will happen until the economy runs out of steam....which I dont see happening until late 2006.

May the force be with you.

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I have decided to forget about any HPC for another year and even then it wont be a great crash. The best we can hope for is a slow decline. I am dismissing any crash and will analayse the situation in a year. The best we can hope for is that the economy takes a dive....but I think it will take another 2 years before this is in full flight as public spending is still too strong.

I thought we'd be in a full decline in prices by now but its obvious nothing will happen until the economy runs out of steam....which I dont see happening until late 2006.

May the force be with you.

speak for yourself.

dont forget to de-register.....

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I have decided to forget about any HPC for another year and even then it wont be a great crash. The best we can hope for is a slow decline. I am dismissing any crash and will analayse the situation in a year. The best we can hope for is that the economy takes a dive....but I think it will take another 2 years before this is in full flight as public spending is still too strong.

I thought we'd be in a full decline in prices by now but its obvious nothing will happen until the economy runs out of steam....which I dont see happening until late 2006.

May the force be with you.

Surely being so willing to admit being wrong brings with it a willingness to admit that the new prediction could be wrong too?

:rolleyes:

BTW I applaude your courage.

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I thought we'd be in a full decline in prices by now but its obvious nothing will happen until the economy runs out of steam....which I dont see happening until late 2006.

May the force be with you.

It is not possible to predict when asset price bubbles will burst, we can only say that asset prices are out of line with economic fundamentals and are likely to return to trend.

Interestingly when predicted crashed do not appear at a particular point this is taken by bulls to be proof that they are right and bears are wrong. It should be observed that bulls make no similar predictions as to when crashes will not occur and consequently the reverse logic can not be used against them.

The second of Andrew Farlow's papers (see the home page) contains a very detailed explanaiton of asset price bubbles, all readers are advised to familiarise themselves with the work.

Edited by Young Goat

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I have decided to forget about any HPC for another year and even then it wont be a great crash. The best we can hope for is a slow decline. I am dismissing any crash and will analayse the situation in a year. The best we can hope for is that the economy takes a dive....but I think it will take another 2 years before this is in full flight as public spending is still too strong.

I thought we'd be in a full decline in prices by now but its obvious nothing will happen until the economy runs out of steam....which I dont see happening until late 2006.

May the force be with you.

Hi,

Not a bad policy. I think it is well under way, it is developing up in just the same way as the last two, just sit back and wait is all you can really do now. We are at the plateau of the HPC curve - it was harder a year or two ago to be taken seriously when there was no bad economic news and the media and EA's had no reason to sound even slightly bearish. Just look though - 20% to 3% HPI in a year masking some reasonably big and individual, regional falls. Economic news pretty bad, bankruptcies and repocessions galloping away. I don't think there is any other way to read it but a decline here onwards unless the economy and consumer debt changes combined with Gordon getting the trade and fiscal defecits under control.

I do think the big swinging factor in this HPC is the level of investors in the market - or more specifically, amateur investors who have piled in. It need not be a big economic shock necessarily. Panic runs when-as the anecdotal pricing falls become evident, if high street sales and sales volumes do not pick up around christmas, which may cause large job losses after Janaury, if sterling tanks only moderatly. The difference in this markey from the past ones is the level of gearing and debt that makes things all the more sensitive, it may not need be the sledgehammer event people are expecting. Agreed though, it can become unhealthy to dwell on it too much.

Boomer

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Hi,

Not a bad policy. I think it is well under way, it is developing up in just the same way as the last two, just sit back and wait is all you can really do now. We are at the plateau of the HPC curve - it was harder a year or two ago to be taken seriously when there was no bad economic news and the media and EA's had no reason to sound even slightly bearish. Just look though - 20% to 3% HPI in a year masking some reasonably big and individual, regional falls. Economic news pretty bad, bankruptcies and repocessions galloping away. I don't think there is any other way to read it but a decline here onwards unless the economy and consumer debt changes combined with Gordon getting the trade and fiscal defecits under control.

I do think the big swinging factor in this HPC is the level of investors in the market - or more specifically, amateur investors who have piled in. It need not be a big economic shock necessarily. Panic runs when-as the anecdotal pricing falls become evident, if high street sales and sales volumes do not pick up around christmas, which may cause large job losses after Janaury, if sterling tanks only moderatly. The difference in this markey from the past ones is the level of gearing and debt that makes things all the more sensitive, it may not need be the sledgehammer event people are expecting. Agreed though, it can become unhealthy to dwell on it too much.

Boomer

The last two years of LR YoY figures (rounded to one decimal) are:

July - Sept 2003 10.6

12.6

14.1

16.1

July - Sept 2004 17.2

11.8

10.3

5.4

July - Sept 2005 3.5

The trend is a continuing and sharp slow down in house price inflation during 2005. It is still quite possible that by the end of 2005 YoY price differences will be a small positive, flat or negative. What seems most unlikely is that high levels of HPI will start up again. Other things being equal there is room for interpretation about speed but not direction.

Edited by New Bear

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I agree to a point Bagehot! Autumn 2006. But we will see something resembling a crash in my opinion. BTW, just spoken to two EA contacts in the Forest of Dean - difficult market below 300,000. Above 300,000, no-one even bothering to bargain. Weird.

Edited by gruffydd

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ALl of this can become very compulsive but I am going to just assume nothing will happen until late 2006. I just hope we dont have any more inflation with SIPPS.

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I agree to a point Bagehot! Autumn 2006. But we will see something resembling a crash in my opinion. BTW, just spoken to two EA contacts in the Forest of Dean - difficult market below 300,000. Above 300,000, no-one even bothering to bargain. Weird.

I joined this forum in 2004 as a bull stating no crash was likely without a catastrophic and sudden economic jolt such as the rapid rate hikes last time round.

I then mellowed to the bearish cause, which was in part a response to my having taken a hit on 1 of my B2Ls, which was a 2 bed new build.

Now, Im starting to re - connect my original doctrine that no crash is possible without the fabled sudden external jolt.

For those that keep refering us all to economic theory and Mr Fallon may I remind you again that housing is not a pure investment medium. Unlike shares or gold everyone needs a place to live and aspires to a quality home.

Also note that I maintain that the rise of the pure interest only mortgage has not been accounted for by the economics academics. Academics tend to apply the past to the present without spotting subtle 'coal face' changes such as the rise of IO.

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The last two years of LR YoY figures (rounded to one decimal) are:

July - Sept 2003 10.6

12.6

14.1

16.1

July - Sept 2004 17.2

11.8

10.3

5.4

July - Sept 2005 3.5

The trend is a continuing and sharp slow down in house price inflation during 2005. It is still quite possible that by the end of 2005 YoY price differences will be a small positive, flat or negative. What seems most unlikely is that high levels of HPI will start up again. Other things being equal there is room for interpretation about speed but not direction.

Please enlighten me, why no room for interpretation on direction?

Does that mean when HPI was 17.2%, there was no room for interpretation on direction then either?

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Not just on this thread but im noticing that alot of people have gone from really bearish to moderate bullish in the space of a week. One day if the blog says its all doom and gloom then certain 'bears' state without a doubt that it was obvious, that they knew it all along, then as soon as the blog doesnt support thier view over the next few days they turn into bears.

Gotto admit, it looks like very sheepish behaviour.

Don't know about other potential FTB'rs but i personally, even with my above average wage and resonable deposit cannot afford anything other than a wooden park home.

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Please enlighten me, why no room for interpretation on direction?

Does that mean when HPI was 17.2%, there was no room for interpretation on direction then either?

No you are quite right, there is room for interpretation on both speed and direction.

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I've not long joined HPC and the view I have is that prices aren't going to fall significantly this year. This is based on information that I took from this site. I thought property prices were ridiculous and I was seeing a subtle change in the market, especially lots of fixed priced properties,which in Scotland, is usually offers over if it's a healthy market. Then I found this place.

The bubble is much bigger this time so it will take longer to turn around. I'm no economist or expert but I do have an aversion to overblown debt, which is why I'm planning to wait 3 or 4 years. HPI is lower each quarter, so a lot of you bears are correct!

Are prices going to jump up to 20%? - What conditions are in place for it to do so?

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Ok, I may have been wrong expecting price falls by now. But this was mainly because of the interest rate reduction. If we didn't have that, we would most likely have negative inflation by now.

The only factor stopping house price's collapsing, is that the public is taking on more and more debt. This additional debt is hurting, just look at the personal bankruptcies, house repossession applications, bad debt allocations and company insolvencies. If that debt growth slowed to be level to wage inflation the economy would clearly be in recession along with house price falls.

If interest rates fall again, I would expect more debt to be taken on pushing prices yet higher. But this would delay the enevitable. IRs can't fall forever. There will be a point where they have to rise. And when they do, it will hurt the indebted - alot.

Clearly, I would like IR rates to rise now. I'm not being selfish in wanting that, it's either take the pain now, or it will be more painful later.

What will I do if IR rates fall? I still won't buy. It's cheaper to rent in most parts of the country. Not my ideal solution, but I refuse to take on a massive debt burden, that homeowners so eagerily want me to do!

Edited by Jason

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I have decided to forget about any HPC for another year and even then it wont be a great crash.

God man! Are you not checking and keeping your local rags?

National average targets are fictitious, they don’t exist.

They are just a collection of all the statistics.

[I am not buying in south east London until north Wales drops

At least another 20%?????? ]:wacko:

I did an internet research for an area I use to live, and sold in 1993.

It records an average of 31% house price drops.

My property fell 40%.

I am seeing drops in the local papers that I did not see last year.

And next year I expect to see further drops.

I can now afford to buy a 4 bed again, I couldn’t last year!

Watch the papers. Don’t take your eye off the ball.

They call it ‘house hunting’ for a reason.

Edited by burnt before

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Please enlighten me, why no room for interpretation on direction?

Does that mean when HPI was 17.2%, there was no room for interpretation on direction then either?

Hi TTRTR,

Just out of interest, how many crash cycles have you traded through yourself, in the past?

Boomer

Edited by boom_and_bust

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The market is way overbought, however its being artificially held up by low interest rates, press propaganda an dgovernment policy. I think we'll see at best stagnation until salaries catch up :blink: or we need an outside factor impacting the economy before it will crash. Oil,Interest rate increase tax change.....don't really know but certainly we need a catalyst. I just don't see a crash until something pushes it over the edge.

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Hi TTRTR,

Just out of interest, how many crash cycles have you traded through yourself, in the past?

Boomer

I'd love to sit here & write a long post about every threatened crash since the early 90's & how I've stuck with it despite the doom-mongering, but I'm watching TV.

What will I do if IR rates fall? I still won't buy. It's cheaper to rent in most parts of the country. Not my ideal solution, but I refuse to take on a massive debt burden, that homeowners so eagerily want me to do!

It won't necessarily be cheaper to rent when IR's drop now will it?

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The important facts are very static and very, very dull.

House prices are unafforable for most people.

'Stretching yourself to get on the ladder' won't work because you need high inflation to have a real ladder, so the ladder isn't there.

Inflation won't bail us out this time.

If we can't maintain VERY low rates of inflation and unemployment, we are vulnerable to a crash.

(Yawn).

It's fun to debate about moves of 0.25% in interest rates or rises of 3.75%/quarter in house prices and where they might lead but those boring facts are always there in the background and they aren't really changing. And while they don't change, personally I'm going to carry on sticking my money somewhere it makes more money, and carry on waiting.

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Abroad - "we need a catalyst. I just don't see a crash until something pushes it over the edge".

We'd need to have a fundamental change to the economic situation, yes - but when all that is required is a change to a situation of record lows of interest rates and unemployment, then I'd have thought that's pretty likely to happen and I'd be surprised if we were waiting a decade for it.

It's very, very hard to read the signs right when you're right up close to them. I remember in the last recession retail sales dropped off massively. We had rising unemployment, interest rates were crippling people's finances so no big surprise there. The local traders round me were in the local rag week after week blaming their woes on... a 20p car park charge in our local car parks :lol:

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What is everybody talking about? The crash has already started. I've been back to England twice within the past 11 months or so, and where I'm looking to buy, prices are down a good 10% to 15%. And that's just the asking prices. Plus, many more homes are for sale--some have been on the market for more than a year.

Maybe you guys are just too close to things. Step back. Take a deep breath. The big picture is there.

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I dont care what anyone says - If the average man and women in the street say "these prices are silly - I cant move up the ladder because Im 45 and cannot afford to take on another £100K for an extra bedroom with only 20 years left to pay".

FACT: People have STOPPED buying houses - sales are dratically down.

Please look at the LR figures for the last 2 YEARS. You will understand WHY the average price is going up.

LR_over_2_years.jpg

When looking at it this way you can see why it is very heavily weighted on SALES at the threshold of 120-200K. The sales after that are WAY WAY up over the last 2 years. In other words people ARE borrowing more money to buy the same house, effectively. This has meant that the AVERAGE house price is UP. This is FACT.

If we look at the figures that are NOT favourable to us i.e. 150k onwards lets say you can see that these figures are very high on 2003. A lot of debt has been taken on to buy in this period BUT the last 12 months are only a very very small factor in this. TTRT and others are right. The prices HAVE gone up but a lot of this is in the middle to top end market NOT the FTB market. If sales continue to drop then the housing market will eventually collapse.

Digest and see what I mean - Dont despare its starting to crumble BUT they wont go down without a fight.

*** PICTURE LINK NOW FIXED *****

post-2719-1131580487_thumb.jpg

Edited by teddyboy

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I think the market is very eratic. I have seen some houses sit for sale for months yet others have sold within a week. Quite often the ones selling within a week seem quite highly priced but they are quality.

The vendors of these houses which go under offer within a week would dismiss any talk of a HPC. Certainly some of this sales fall through but some complete.

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What is everybody talking about? The crash has already started. I've been back to England twice within the past 11 months or so, and where I'm looking to buy, prices are down a good 10% to 15%. And that's just the asking prices. Plus, many more homes are for sale--some have been on the market for more than a year.

Well said!!

Some people can't see the wood for the trees, its frikkin obvious prices are falling why these people continue to live in denial is beyond me. The reductions in prices are well within DrBub's definition of a crash....

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  • 337 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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