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The Masked Tulip

Uk House Prices Bull Market Soaring Momentum, 10% Inflation By October?

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If hpi is 10% by October then what will happen with h2b2? How will Osborne/Carney be able to defend loose money and assisted house purchase if there is a bubble underway (which is already taking place but not showing up yet in sold prices).

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If hpi is 10% by October then what will happen with h2b2? How will Osborne/Carney be able to defend loose money and assisted house purchase if there is a bubble underway (which is already taking place but not showing up yet in sold prices).

yep. each of the 150 people "helped" to buy will need 10% more of each of the money they need...their own deposit, the "free loan" and the actual loan.

I think there is a logical error in the Help to buy boom scenario and its illustrated by the above sentence.

If HTB is required to get the market moving, that means that these buyers are those that couldnt afford to enter...they are therefore at the limit of borrowing capabilitie even with the scheme....add 10% to each and every cost by virtue of the scheme, will make even current entrants unable to finance the "new" house price level.....the only cure would be to increase the "free" loan or reduce rates even more or reduce lending criteria even more...maybe even bring back IO..

Edited by Bloo Loo

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yep. each of the 150 people "helped" to buy will need 10% more of each of the money they need...their own deposit, the "free loan" and the actual loan.

I think there is a logical error in the Help to buy boom scenario and its illustrated by the above sentence.

If HTB is required to get the market moving, that means that these buyers are those that couldnt afford to enter...they are therefore at the limit of borrowing capabilitie even with the scheme....add 10% to each and every cost by virtue of the scheme, will make even current entrants unable to finance the "new" house price level.....the only cure would be to increase the "free" loan or reduce rates even more or reduce lending criteria even more...maybe even bring back IO..

I think it's not only those that can afford to enter but those who are qualified to enter. Are there enough potential buyers out there with good enough credit ratings to bring volumes back up to pre 2007 levels even with h2b? The bigger problem though is that h2b and ffl even at liw transaction levels are raising sellers expectations and setting new price levels which will become 'normal' in the absence of a true market for housing.

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Walayat in "'I'm now balls deep in property" mode.

Nadeem Walayat, the stealth boom loon. Apparently no other financial advisor or journalist has spotted Osborne's HPI efforts except this chump, despite them all talking about it incessantly for months.

Prices are driven by liquidity first and foremost not sentiment. If Walayat had half an idea how markets work he wouldn't have been selling out of equities for the last 18 months.

CXO gave him a below average 40% accuracy rating last year. Avoid.

http://www.cxoadvisory.com/9681/individual-gurus/nadeem-walayats-oraculations/

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Nadeem Walayat, the stealth boom loon. Apparently no other financial advisor or journalist has spotted Osborne's HPI efforts except this chump, despite them all talking about it incessantly for months.

Prices are driven by liquidity first and foremost not sentiment. If Walayat had half an idea how markets work he wouldn't have been selling out of equities for the last 18 months.

CXO gave him a below average 40% accuracy rating last year. Avoid.

http://www.cxoadvisory.com/9681/individual-gurus/nadeem-walayats-oraculations/

Interesting link.

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Of course it is entirely plausible with another 20% shaved off sterling, perhaps parity with the Euro, which seems to be where BOE are heading - which of course makes sense being part of Europe. The BOE could then un-offically peg the Pound to the Euro thus Euro via the backdoor.

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What Academics and Journalists Will Never Understand About Markets

In having immersed by myself in the markets for 30 years now, I know that what many academics tend to take for granted rarely matches reality. Whilst I covered many aspects of trading markets in my last ebook (Stocks Stealth Bull Market 2013 and Beyond - Free Download). However in terms of economic trends what academics will always fail to grasp is that markets are NOT driven by fundamentals but by SENTIMENT and it is SENTIMENT that CREATES the fundamentals!

Indeed markets are at times driven in large part by sentiment but often sentiment can reverse overnight.

Does he present a convincing case why sentiment on house price increases will remain positive for any length of time - if sentiment is as positive as he suggests.

For sure a few will be panicked into buying. After all the media propaganda is relentless at the moment and a bit reminiscent of the period approaching the 2007/2008 collapse in house prices.

As for "markets are NOT driven by fundamentals but by SENTIMENT and it is SENTIMENT that CREATES the fundamentals!"

That seems to be a bit of a contradiction and a bit unrealistic - and it doesn't tie in with the usual definition of financial "fundamentals".

http://

www.investopedia.com/articles/fundamental/03/022603.asp

He seems to be doing a bit of wishful kite flying when he's talking about sentiment creating the fundamentals. It's almost on a par with "it's a new paradigm" - indeed it would be a new paradigm.

Edited by billybong

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Most of the people I know who are trying to sell aren't getting anywhere. Many are asking what they paid pre-crisis. :blink:

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Stuff is selling where I am in SE London.

Property is selling in East Anglia - at least when it's priced well - but there are a huge number of 500K+ properties around not doing anything. Even with H2B/low IR most people are priced out - and these are not mansions - just reasonable family homes.

I do wonder how much of the provincial market is supported by London indirectly, most of the people buying the higher priced property locally are coming from selling London properties - they are not locals upgrading - the locals all have 2 kids to a room and no garden.

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FFS, of course property is selling, it sells everyday, every hour, about 60,000 sales a month..

it doesnt mean that its selling for asking price plus in every hamlet outside of London.

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Of course it is entirely plausible with another 20% shaved off sterling, perhaps parity with the Euro, which seems to be where BOE are heading - which of course makes sense being part of Europe. The BOE could then un-offically peg the Pound to the Euro thus Euro via the backdoor.

Why do that when they can make us ultra competitive at £2=1 Euro or £4=1 Euro or, ultimately, £1000=1 Euro

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The thing is he's not just suggesting there's going to be a bit of growth in house prices for a while but he's actually calling a New Bull Market.

He's even called it a New Bull Market and with green coloured text.

New bull markets in UK housing last about 10 years and now we know these days there's hardly any bust. None worth mentioning at any rate.

So assuming for a moment that he's correct that seems to imply at least another 10 years of rising house prices - probably at an almost exponential rate as implied by the higher and higher peaks and troughs in the historical house price graph on the HPC home page. So in about 10 years time the average UK house price is indeed maybe going to cost somewhere between £0.5 million and £1 million? Somewhere around that order of magnitude?

See this predicting business is easy. Fill your boots :lol:

NOTE: This is not financial advice.

What it's going to do to the UK economy this time doesn't bear thinking about. There's no Woolies, Comet etc etc etc left to go bust next time around.

Edited by billybong

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Of course it is entirely plausible with another 20% shaved off sterling, perhaps parity with the Euro, which seems to be where BOE are heading - which of course makes sense being part of Europe. The BOE could then un-offically peg the Pound to the Euro thus Euro via the backdoor.

Very plausable...

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What it's going to do to the UK economy this time doesn't bear thinking about. There's no Woolies, Comet etc etc etc left to go bust next time around.

Yes. Very good point, especially on a day when thee are reports of 20,000 shops on the High Street going bust. It is 20,000 isn't it?

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The thing is he's not just suggesting there's going to be a bit of growth in house prices for a while but he's actually calling a New Bull Market.

He's even called it a New Bull Market and with green coloured text.

New bull markets in UK housing last about 10 years and now we know these days there's hardly any bust. None worth mentioning at any rate.

So assuming for a moment that he's correct that seems to imply at least another 10 years of rising house prices - probably at an almost exponential rate as implied by the higher and higher peaks and troughs in the historical house price graph on the HPC home price. So in about 10 years time the average UK house price is indeed maybe going to cost somewhere between £0.5 million and £1 million? Somewhere around that order of magnitude?

See this predicting business is easy. Fill your boots :lol:

NOTE: This is not financial advice.

What it's going to do to the UK economy this time doesn't bear thinking about. There's no Woolies, Comet etc etc etc left to go bust next time around.

:lol:

You just forgot to include a chart with a big green arrow on the right hand side pointing upwards at 45 degrees.

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Yes. Very good point, especially on a day when thee are reports of 20,000 shops on the High Street going bust. It is 20,000 isn't it?

http://

www.retailresearch.org/whosegonebust.php

Thanks. According to that there's around 23,000 or so stores closed since and including 2007.

Edited by billybong

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http://

www.retailresearch.org/whosegonebust.php

Thanks. According to that there's around 23,000 or so stores closed since and including 2007.

Reminds me of a US website that was running around 2000 for a few years detailing all the dot.cons that had gone bust.

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Why do that when they can make us ultra competitive at £2=1 Euro or £4=1 Euro or, ultimately, £1000=1 Euro

You'll have to be quick to enjoy the benefit though with consumer inflation going up 50% a month.

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For what its worth my personal analysis is that while previous crashes have been driven by shortage of FTBs, the next one will be driven from the top by people cashing out and downsizing/down-"location"-ing.

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For what its worth my personal analysis is that while previous crashes have been driven by shortage of FTBs, the next one will be driven from the top by people cashing out and downsizing/down-"location"-ing.

I have lost count of the houses where the people selling have told me that they are downsizing.

In this sense, viewing houses regularly gives a good insight into what is going on - i.e. it has made me accutely aware that there are vast numbers of people looking to downsize but far less people looking to buy, or who can afford to buy, bigger properties.

As more and more of us are single in the UK, or have less children, then I do wonder how saleable such large houses are going forward. Then you have the running costs on top with a large property - heating, decorating, upkeep, council tax.

I have noticed in one of the posher suburb of Swansea, which is mainly 4 and 5 bedroom families, that the houses which do sell appear to be mainly bought by Pakistani/Bangladeshi families who are basically housing 3 generations in them - husband/wife, kids and one or more grand-parents.

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Never fear! I just used google time machine to look into the future and pulled out this chart.

2qk3qyr.jpg

Have you got a chart for Tulip Bulbs?

I wonder, If the Government during the Tulip Mania period had pumped extra funds into the bubble, what kind of world would we be in now?

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