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Have We Finally Reached The Back To Normal Point

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We had a big crash in the north east.Many terraces falling from £100k to £50k.Ex council 3 bed semis from around £110k to £70k.The better areas/houses still saw 20% down nominal from 2004 (we topped ten and flatlined until 2007) so huge taking in inflation.

I have been a member of this forum since 2004, but bought a flat in 2010 in Rugby. It was a repossession for £53K down from the original purchase price of £102K new build in 2006. As far as I was concerned that was the bottom, and flats in my block are changing hands now for £55K to £60K so little increase, but no crash either.

I still visit this forum more for the financial points of view but the HPC in my opinion has been and gone.

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Who created that phases of an asset bubble graph and why is it referred to like gospel on here?

<snip>

Indeed, i get tired of seeing it get dragged out time and time again like some holy gourd or sandal.

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Indeed, i get tired of seeing it get dragged out time and time again like some holy gourd or sandal.

The denial phase lasted a good 8 years...

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The denial phase lasted a good 8 years...

We are certainly in a very unusual place.

Ordinarilly we would have seen the bubble collapse pretty much in the way the chart suggests. Because of the weakness of the Eurozone and the US plus massive savings gluts from the middle and far east the BOE has been able to keep interest rates at a level that would otherwise be impossible; in a normal global economy our interest rates would be 5%+ or inflation would be running away at 10% p/a.

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See the "welcome to the fear phase" thread posted some time back.

Oh yeah, and the something is happening thread from about 3 months ago.

Bascially :

i) Nothing is happening.

ii) We are not in the fear phase.

iii) Asking prices are going up a lot. Sales prices are pretty much flat everywhere except London. Volumes are well down still.

The market will not match the normal bubble curve because it is different this time. Uprecedented government support is keeping prices largely static. This will continue until another financial crisis hits or interest rates rise, in which case we will go from the "bugger all is happening" phase to the "oh shit" phase in the space of a couple of weeks. The potential to have a very sharp change is definitely there. But it needs the trigger.

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Indeed, i get tired of seeing it get dragged out time and time again like some holy gourd or sandal.

Are you tired of seeing it because you disagree with it, or for some other reason?

I think it's a fairly reasonable outline of the bubble process

For those that are interested the author is a geography professor, and he has a website;

http://people.hofstra.edu/geotrans/index.html

And he explains the stages of the bubble here;

http://people.hofstra.edu/geotrans/eng/ch7en/conc7en/stages_in_a_bubble.html

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The market will not match the normal bubble curve because it is different this time.

I thought we'd at least moved on from the 'New Paradigm!!!' phase ;)

Edited by SpectrumFX

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Are you tired of seeing it because you disagree with it, or for some other reason?

I think it's a fairly reasonable outline of the bubble process

For those that are interested the author is a geography professor, and he has a website;

http://people.hofstra.edu/geotrans/index.html

And he explains the stages of the bubble here;

http://people.hofstra.edu/geotrans/eng/ch7en/conc7en/stages_in_a_bubble.html

I've sent the author an email to ask what his opinion is, if I get a response I'll update the board.

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I thought we'd at least moved on from the 'New Paradigm!!!' phase ;)

Maybe we are in the "Government chucks a load of money at the market to try to keep it afloat" phase. Some might argue this is consistent with the "New Paradigm" phase.

The problem with the life cycle of a bubble is that eveyone thinks the bubble should look like this, whereas in fact it is a example of how a typical bubble might develop, not a definitive model for evey bubble.

For example some of the phases may not be present, or extended massively or compressed to a near negligible time.

The only time you can really call the phases IMO is afterwards, when everything is of course clearly obvious...

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If the bubble is linked with lax sources of credit, then it will endure far longer than many observers would expect, therefore discrediting many rational assessments that the situation is unsustainable. At some point statements are made about entirely new fundamentals implying that a "permanent high plateau" has been reached to justify future price increases; the bubble is about to collapse.

Sounds pretty accurate to me.

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The market will not match the normal bubble curve because it is different this time. Uprecedented government support is keeping prices largely static. This will continue until another financial crisis hits or interest rates rise, in which case we will go from the "bugger all is happening" phase to the "oh shit" phase in the space of a couple of weeks. The potential to have a very sharp change is definitely there. But it needs the trigger.

Agree.

Nothing that is taking place now is normal. There are no markets any more in the traditional sense. The hand of government is everywhere and the problem is the system of money itself. They can only delay the inevitable, however. Eventually something will snap and the whole lot will come crashing down.

Edited by Errol

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Sounds pretty accurate to me.

Permanently high plateau? Reminds me of Jeremy Warner in 2007 talking about UK house prices.

Even a trillion pounds of govt spending hasn't been enough to make that true.

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How much time do the media spend talking about sales volumes? Let`s face it, everyone can`t get "their price", the wall of money rushing into property is not coming back.

Sky mentioned lending figures last night, they are at half the level of the so called peak. No mention of volumes. Seems like a lot of bubble blowing will be required :lol:

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I've sent the author an email to ask what his opinion is, if I get a response I'll update the board.

Sounds good, I'd be interested in his opinion - do keep us updated! B)

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Are you tired of seeing it because you disagree with it, or for some other reason?

<snip>

It bothers me because of the blind faith some people put into it that the HPC will follow that graph exactly. There may be extra components to this crash's graph when we can look back at it and people should be aware of that.

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So do they feel cool that they have bought an over priced item.....or do they feel ripped off? ;)

Well, do you feel cool having rackup-up over 22,500 posts on this forum?

That's nearly 7 posts a day, every day, for the nine years you have been a member.

Be honest - it may be time to call it a day.

Edited by marko

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Well, do you feel cool having rackup-up 22,000 posts on this forum?

That's 10 posts a day, every day, for over six years.

Be honest.

.....neither hot, cold nor coolly ripped off. ;)

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It bothers me because of the blind faith some people put into it that the HPC will follow that graph exactly. There may be extra components to this crash's graph when we can look back at it and people should be aware of that.

There is no time scale on the graph, it is, however, a good example of the way human nature works. Obviously timing can be changed by determined intervention but the general idea is good.

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There is no time scale on the graph, it is, however, a good example of the way human nature works. Obviously timing can be changed by determined intervention but the general idea is good.

The graph is indeed idealised

I imagine that no market correction had ever followed it closely

Fwiw I think we're in a 2nd back to normal phase, unsurprisingly following the election cycle

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Crucially - you can actually propel a motorbike using the kickstart - slowly, tediously, and very uncomfortably.

Much easier to let the economy engine do its thing.

You can do it in a car too, propel the vehicle by turning the starter motor in gear.

Only a matter of time until the battery runs flat.

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It bothers me because of the blind faith some people put into it that the HPC will follow that graph exactly. There may be extra components to this crash's graph when we can look back at it and people should be aware of that.

Fair enough. One thing we can all agree is the current situation is anything but 'textbook'.

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And we can agree property is in bubble and that sooner or later bubbles burst. The bubble is being kept alive so the question is for how long and what will the fall be. Could be in one or two years centred around the election or some other event or could be 10 years with no nominal falls but falls in real terms.

But while pries are artificially inflated it is doing untold damage to a large section of society while benefiting a few. Unfortunately MOST people think rising property prices are a good thing and many of the section being damaged will see HtB as their chance to benefit from HPI.

So in that sense things are back to normal.

Volumes still massively trailing the period most people regard as the most normal of normal though, the run up to `07?

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And we can agree property is in bubble and that sooner or later bubbles burst. The bubble is being kept alive so the question is for how long and what will the fall be. Could be in one or two years centred around the election or some other event or could be 10 years with no nominal falls but falls in real terms.

We're in uncharted waters here, as a result of the Fixed Parliaments Act 2011, the next General Election is slated to be held on 7th May 2015, previously governments have been able to engineer elections early, meaning it was easy to create a mini-boom, this time it will be far easier for opposition parties to time their approaches too.

My personal view is that Cameron has shot his bolt far too early, whereas UKIP are probably still a year away from showing their hand.

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  • 399 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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