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rantnrave

Real House Prices Up

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From the recent Nationwide Quarterly Update

rM9i41w.png

Up £900 a month over the last quarter, in real terms.

A blip? If so, for how long? All down to government meddling? The argument that HPs are at least loss-making as a store of value may have to be put on hold.

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But volumes down?

It sort-of makes sense - in regions where prices are falling (but still too high), it must be very hard to get a mortgage w/o a very large deposit. In regions where they are rising, it's still seen as a get-rich/hide-your-dosh scheme by both the buyers and banks, hence a localised bubble.

It would be fascinating to see mortgage lending by region (both average amounts and volumes).

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bubble-lifecycle.gif

Doesn't this look a little bit like the "return to normal" phase of the bubble lifecycle. just slightly drawn out? :huh:

I think we've had the 'return to normal'.Looks more akin to the 'fear' phase but then that's the thing with charts.

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I think we've had the 'return to normal'.Looks more akin to the 'fear' phase but then that's the thing with charts.

Quite, I suppose with all of the government meddling and it's consequences the blip upwards could be like the last blip on the monitor just before the patient finally succumbs. <_<

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Well, you have to ask yourself, have the fundamentals changed?

> Unemployment down? No

> Lower Taxes? No

> Lower utility bills? No

> Large wage increases? No

> Traveling costs down? No

> Interest rates down? Yes

> Lending to anyone with 5% deposit? Yes

> government interference up? Yes

So we can argue that the uptick is unsustainable on the basis that fundamentals are crap interest rates will not stay this low or go even lower, the government will exhaust stimulative measures.

The only thing that can be done at this stage is to directly issue mortgages from the BOE via a new scheme that Carney will announce next week/month. If goldman/the bankers orchistrate this then I expect some long fixed mortgages at 2%, with a subsequent boom dwarfing that of 2008, then followed by a catastrophic collapse around 2018.

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These things rarely go in one direction only, and the overall trend is downwards and intact. We all know what Osborne is attempting with 'Help to Buy', if anything the current phase means fewer buyers of existing stock, and the next phase of HTB (as it stands) seems to be a guaranteed flop. I don't doubt that HTB has allowed many to buy who wouldn't otherwise be able to, but there are not enough of these people to revive volumes imo. If anything, if you are not interested in a newbuild property, HTB is a boon as it clears out potential competition, and the sort of competition who might be bidding more than they could afford. The downside is of course that it risks raising asking price ambitions amongst sellers in general(who perhaps think that the current HTB arrangements will apply to them in January, which is not true). I've seen pretty crazy asking price action in the past few months, but most of it is meaningless if there are no sales.

Wages dropping(real) to boot, and all the usual stuff about interest rate risk too. Real wages are back to turn-of-the-century levels, and prices should follow suit.

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These things rarely go in one direction only, and the overall trend is downwards and intact. We all know what Osborne is attempting with 'Help to Buy', if anything the current phase means fewer buyers of existing stock, and the next phase of HTB (as it stands) seems to be a guaranteed flop. I don't doubt that HTB has allowed many to buy who wouldn't otherwise be able to, but there are not enough of these people to revive volumes imo. If anything, if you are not interested in a newbuild property, HTB is a boon as it clears out potential competition, and the sort of competition who might be bidding more than they could afford. The downside is of course that it risks raising asking price ambitions amongst sellers in general(who perhaps think that the current HTB arrangements will apply to them in January, which is not true). I've seen pretty crazy asking price action in the past few months, but most of it is meaningless if there are no sales.

Wages dropping(real) to boot, and all the usual stuff about interest rate risk too. Real wages are back to turn-of-the-century levels, and prices should follow suit.

Don't worry, "Like to buy" will be along soon. Where you stand before your mortgage advisor like a tweenie begging their parents for a puppy, promising to feed it, walk it, clean up after it and be completely responsible for it. The magnitude of credit offered will be judged based upon the ferocity of tantrum you can display. Credit will be awarded for technical and artistic merit. No credit checks will be made.

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Don't worry, "Like to buy" will be along soon. Where you stand before your mortgage advisor like a tweenie begging their parents for a puppy, promising to feed it, walk it, clean up after it and be completely responsible for it. The magnitude of credit offered will be judged based upon the ferocity of tantrum you can display. Credit will be awarded for technical and artistic merit. No credit checks will be made.

Probably something along those lines happens with Bank of Dumb and Mad already.

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Wages dropping(real) to boot, and all the usual stuff about interest rate risk too. Real wages are back to turn-of-the-century levels, and prices should follow suit.

They certainly would follow suit if affordability (interest rates) of monthly payments was back to turn of the century levels. The only thing keeping up prices IMO is low interest rates, which by magic they have managed to get down to below retail inflation levels.

I am skeptical of interest rates staying as low as they are without Carney issuing them directly from BOE, which I highly suspect will be the new magic policy that he* comes up with (*actually they have already planned it but they will keep him as the front man).

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A downward trending sawtooth as expected.

Downward is indeed the trend. Any extrapolation from a short term blip like this is nonsense IMO.

I fail to see where in the "history of a bubble" graph the price spikes upwards due to massive government intervention.

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Why did you expect prices to be falling when interest rates have been falling for the last year and affordability has been increasing?

There's a difference between offering the money at low rates and actually giving it to people/having them take it up.

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Quite, I suppose with all of the government meddling and it's consequences the blip upwards could be like the last blip on the monitor just before the patient finally succumbs. <_<

Talking to acquaintances these days,there is little of the 2007 fervour for property at any price and quite a heavy mood of uncertainty,although I'd stop short of calling it fear.

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bubble-lifecycle.gif

Doesn't this look a little bit like the "return to normal" phase of the bubble lifecycle. just slightly drawn out? :huh:

It could also look a little bit like the return to mean bit, couldn't it... :ph34r:

I've spent 10 years on this site now, it has been consistently wrong and so have most of the posters including me. It would be foolish not to embrace the possibility that we may have had all the crash we're going to, at least in nominal terms.

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Talking to acquaintances these days,there is little of the 2007 fervour for property at any price and quite a heavy mood of uncertainty,although I'd stop short of calling it fear.

IMO the fear phase is easy to spot. It is reflected in a downward trend in the asking price index. This will be behind somewhat from the true fear as IIRC the asking price only reflects new to market properties and not delta due to people relisting at lower prices. It is unfortunate we don't get this data as IMO this is a leading indicator for the fear phase.

IMO we continue to be in the stagnation phase, at least in my part of the world. Of course across the UK there are significant differences.

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It could also look a little bit like the return to mean bit, couldn't it... :ph34r:

I've spent 10 years on this site now, it has been consistently wrong and so have most of the posters including me. It would be foolish not to embrace the possibility that we may have had all the crash we're going to, at least in nominal terms.

I would have thought the lifecycle of a bubble would hold true if it wasn't for government interference. What is needed is the lifecycle of a bubble including government interference.

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It could also look a little bit like the return to mean bit, couldn't it... :ph34r:

I've spent 10 years on this site now, it has been consistently wrong and so have most of the posters including me. It would be foolish not to embrace the possibility that we may have had all the crash we're going to, at least in nominal terms.

But consistently correct about renting being more cost effective than buying over the last seven years and the big falls are yet to come.

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It would be foolish not to embrace the possibility that we may have had all the crash we're going to, at least in nominal terms.

That was the conclusion I came to a couple of years ago. Real terms falls only unless there is some crisis whereby interest rates are forced up and lenders actually start mass repossessions. In that case, real falls of 50% from peak are likely.

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That was the conclusion I came to a couple of years ago. Real terms falls only unless there is some crisis whereby interest rates are forced up and lenders actually start mass repossessions. In that case, real falls of 50% from peak are likely.

I think 50% is a touch optimistic. 30% to 40% nominal falls when interest rates rise and repossessions commence.

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  • 239 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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