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Bemused

Some Clarification

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I seem to have rattled a few cages. Rather than reply to each poster in turn on my other thread I will clarify my points. I don't know if I have not expressed myself well or some posters are so quick to shout TROLL at any other view points they do not read the posts fully (blinkered by their own dogma?)

1. No issue is clear cut. I pointed out 2 years ago that the boom still had some way to go. Even now some areas have to reduce prices, others are stagnant yet family homes in many areas are still selling. Those brave enough to go against the grain have tried to point this out on the site. There is still life in the market although it is fragile.

2. "Rolling news" is an unhealthy obsession that is detrimental to debate. By focusing solely on what is current much analysis lost.

3. Any fool can see that beneath the surface the economies of UK PLC and the US in particular are in deep trouble.

4. Economies and those that meddle with them are difficult beasts to predict. Timing is therefore very hard particularly with less "fluid" markets such as housing.

5. If you are happy renting and don't hang onto every scrap of evidence of a crash it will probably be a wise decision in the LONG term.

6. The market is likely to stagnate with some rallies and drops for another 18 months and is unlikely to show real signs of bottoming out until 2008. That's a long time to obsess over every fluctuation. If you are so convinced that the market will crash, yet get despondant over every bit of contary news you may have to ask if your beliefs have any real foundation.

7. I don't believe the falls will be as great as many people here expect. I am not sure about other areas of the country but in London and the South East factory and shop workers have been priced out of the market for as long as I can remember.

Sorry a quick edit but I may yet buy a family home after 15 months depending on my personal circumstances and those of the wider economy. This is because I have a BIG fear that economy is in real trouble and the value of my cash will be eroded. Bricks and mortar may well be a safe bet IF I can get a place that is affordable with rates at 7%.

Edited by Bemused

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Wonderful post Bemused, I couldn't agree more. I'm not aware of the earlier posts you're referring to but I agree that the crash will

a be triggerred by the global slowdown, which in turn will be triggerred by the US Consumer slowdown (mid 2006- mid 2007).

b Liquidity will dry up and Classical Economics would argue for a prolonged period of Deflation with inevitable downaward pressure on global house prices.

c The ten countries (primarily Japan, Germany, China) currently financing the US Debt will gradually reduce their purchase of US Treasuries as their own surpluses (gradually) shrink. This will put the US under intense pressure to make repayments which it will do by printing vast sums of dollars. It has already made preparations for this, see: http://www.financialsense.com/fsu/editoria.../2005/1114.html

The upshot of this that although property will suffer large falls in real terms, high levels of inflation will erode this to an extent that nominal falls will not seem so dramatic. I would expect large appreciations of the yen and precious metals over the next 5 years.

d As housing peaked in 89, and troughed 91-93 after a couple of years of stagnation. This time the pattern is likely to be July 2004 peak and 2006- 2008 trough.

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Agreed - this adds a little realism to the debate. I've been on this board for a few weeks now and this is my first post. The second point made is something that I have noticed myself - the reaction to individual stats and articles is frequently OTT. Although I'm far from an expert in Economics I think the focus should be on the bigger picture - the further you stand back the more you see.

Although I am as frustrated as anyone else about the cost of owning a house - not to mention the numerous other ways that my generation and those younger than me are being bled dry - the evidence for a crash is not yet strong enough. I wish I was wrong...

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I seem to have rattled a few cages. Rather than reply to each poster in turn on my other thread I will clarify my points. I don't know if I have not expressed myself well or some posters are so quick to shout TROLL at any other view points they do not read the posts fully (blinkered by their own dogma?)

Don't know why. Good post in my opinion.

If speculation is a major reason for the increases seen in recent years then falls may be more than most people expect in some areas and property types (who knows - we'll have to wait and see). Good houses in good areas may hold their prices.

Edited by karhu

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falls may be more than most people expect in some areas and property types (who knows - we'll have to wait and see). Good houses in good areas may hold their prices.

I will be keeping a keen eye on the price of new build flats in cities such as Manchester, Bristol, Birmingham, Cardiff, Newcastle and the outskirts and less desirable areas of London in particular. I believe that these are the best indicators of which way the winds are blowing.

As for family homes in good locations, I feel there will and has been a more sensible pricing policy of late, yet I have seen no significant falls in the areas I am looking at.

This "crash" if it happens, is I suspect something that we will only acknowledge with hindsight, as the falls will be in small increments over a long period of time.

This is why I fear that many may end up buying before any trough and I may well be one of them.

Edited by Bemused

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I too am unaware of the arguements on the previous threads.

I think your post holds a lot of water. It's high time someone pointed out the reality of what the situation is.

Basically on the previous thread my tone came across as gloating as 2 years ago I posted on this forum that property had plenty of steam left in it. I was heckled off the board by people too wrapped up in their own opinions to share knowledge. I bought then and have since sold and believe that listening to counter arguments is vital.

I was also too harsh in my post that analizing each and every snippet of stats and data relating to the housing market is unhealthy and obsessive, its better to rent and be happy or buy and accept your decision.

I also don't cast blame and refuse to heckle developers and BTL owners and deny them a voice on this forum. They may well be proved right (though I would not sleep easy if I was highly geared).

But tact, subtly and pathos are not my stregnths.

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Stagnation - I doubt this will happen. Property will need to stagnate for 14 - 20 years (depending which source you quote) for wages to catch up......thats an awful long time to prop up a faltering economy that has been propped up for the last 5 years anyway.

Cash erosion - could be true. But it depends what you aim to do with that cash. If you intend to sit on a million quid forever, then yes, I think it will get some nasty bites taken out of it. If on the other hand you intend to invest it in property (invest = buy a home or one for rent) then obviously it doesnt make a lot of sense to buy one house at 1 million when you could buy 2 in 3 years time for the same money.

HPC will it happen? - IMHO yes. Its a lot like a pyramind scheme but supported by banks, builidng socities etc. etc. At some point (and who knows where that point is) The cost of a house will outstrip earnings by 7 times, 8 times, 10 times (as in Ireland apparently).....20 times, 30 times, 1000 times....where does it stop? and who calls a stop to it?....it will stop, its just a matter of 'when' not 'if'.

Safety in property - My personal forcast is 50% correction. If you are comftable buying a house that you may have to live in for 10 or 15 years, then yes, why not buy if you can afford it....but I certainly wouldnt consider property 'safe' when most people seem to be doing multiples of 5,6,7,8 and self cert (so god only knows what their multiples might be!) times salary to buy. That is FEAR driving the NEED to SPECULATE on property because 'it will only go up' and 'I'll be priced out if I dont buy now'

Good house immune from HPC - sort of....they will be the last to drop and the first to rise. A brilliant barometre of whats happening in property.....but they will drop and more or less in line with every other property....no property is an island, every single property in this country is interconnected price wise.

Finally, if you have any doubt whatsoever just see the big blue graph on the HPC homepage and just for one moment put out of your mind HPC and think about it as if was pork bellies, orange juice, gold, tech stocks, a country....or whatever else you choose......now does that graph look like a bubble? does it look sustainable?

What are the driving factors for such an exponential rise?....there isnt any.

If we saw this in Orange juice I would expect to hear of major global weather problems affecting OJ production or growth and the natural reaction would be for that 'stock' to jump. Houses have had nothing that anybody can actually put their finger on and say - 'THIS IS WHY HOUSES ARE WORTH 200% - 300% MORE THAN 7 YEARS AGO'

All IMHO of course.

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economy is in real trouble and the value of my cash will be eroded.

I am bemused (like you). You say you fear that the value of your cash will be eroded (ie inflation will increase); but you also say that you think the "economy is in real trouble" (ie recession). Reccessions are usually associated with less inflation, not more (as aggregate demand in the economy contracts); stagflation is a quite exceptional scenario and has not been seen in this country (or any other) since the 1970's. There seems to be some internal inconsistency in your arguments.

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I am bemused (like you). You say you fear that the value of your cash will be eroded (ie inflation will increase); but you also say that you think the "economy is in real trouble" (ie recession). Reccessions are usually associated with less inflation, not more (as aggregate demand in the economy contracts); stagflation is a quite exceptional scenario and has not been seen in this country (or any other) since the 1970's. There seems to be some internal inconsistency in your arguments.

I don't nececarily plan on buying a property in this country.

The value of the £ does seem to be weakening .. If the US keeps raising inflation and the BOE reduces rates I feel that this trend will continue. Though correct me if I am wrong.

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c The ten countries (primarily Japan, Germany, China) currently financing the US Debt will gradually reduce their purchase of US Treasuries as their own surpluses (gradually) shrink. This will put the US under intense pressure to make repayments which it will do by printing vast sums of dollars. It has already made preparations for this, see: http://www.financialsense.com/fsu/editoria.../2005/1114.html

The upshot of this that although property will suffer large falls in real terms, high levels of inflation will erode this to an extent that nominal falls will not seem so dramatic. I would expect large appreciations of the yen and precious metals over the next 5 years.

This is a most interesting proposition.

There is substance there. It terrifies me that.

That prices could indeed stagnate for 5 years rather than fall because inflation picks up due to helicopters of $s.

Discuss.

:unsure:

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Discuss.

Most interesting that no-one wants to discuss it.

Is it me? Or does it also trouble you so that you deny the possibility (remember Denial?)?

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Most interesting that no-one wants to discuss it.

Is it me? Or does it also trouble you so that you deny the possibility (remember Denial?)?

Having read the financial sense article, it does seem a little worrying. A couple of questions:

Has no reason been given for withdrawing the publication of M3?

Is there really a Plunge Protection Team (i.e. definite evidence for such an entity)? or is it a hypothesis to explain market behaviour?

Peter.

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Great post. I agree.

But if housing and stocks offer no real value - where should i put my deposit? Will any investment be good over the coming years? Should I invest in precious metals, foreign markets or shares in "The Big Issue"?

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1. No issue is clear cut.

....

3. Any fool can see that beneath the surface the economies of UK PLC and the US in particular are in deep trouble.

...

4. Economies . . . are difficult beasts to predict.

In amongst your valid points you contradict yourself. Like many HPCers you have allowed apparent political/personal frustration to cloud your judgement. As with any economy at any time in history, there are at present strengths, weaknesses, opportunities and threats. A rounded observer would look at all of these, not just the W and T parts, but even then would be foolish to state bluntly 'any fool can see that . . .'

Edited by BoredTrainBuilder

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This is a most interesting proposition.

There is substance there. It terrifies me that.

That prices could indeed stagnate for 5 years rather than fall because inflation picks up due to helicopters of $s.

Discuss.

:unsure:

Well.. the MPC primary aim is to hold inflation in check..

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Wonderful post Bemused, I couldn't agree more. I'm not aware of the earlier posts you're referring to but I agree that the crash will

a be triggerred by the global slowdown, which in turn will be triggerred by the US Consumer slowdown (mid 2006- mid 2007).

b Liquidity will dry up and Classical Economics would argue for a prolonged period of Deflation with inevitable downaward pressure on global house prices.

c The ten countries (primarily Japan, Germany, China) currently financing the US Debt will gradually reduce their purchase of US Treasuries as their own surpluses (gradually) shrink. This will put the US under intense pressure to make repayments which it will do by printing vast sums of dollars. It has already made preparations for this, see: http://www.financialsense.com/fsu/editoria.../2005/1114.html

The upshot of this that although property will suffer large falls in real terms, high levels of inflation will erode this to an extent that nominal falls will not seem so dramatic. I would expect large appreciations of the yen and precious metals over the next 5 years.

d As housing peaked in 89, and troughed 91-93 after a couple of years of stagnation. This time the pattern is likely to be July 2004 peak and 2006- 2008 trough.

this is a high quality post!...I commend you!

This,if you have read my posts here and in the financial market forum,is EXACTLY how I am positioned....and the net beneficiaries being japan and the like.......once I convert my holdings BACK to sterling in a few years will be sufficient to buy outright.Sod the mortgage.

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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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