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Final Warning For A Uk House Prices Boom

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Guest unfunded_liability
Take this as your final warning for a UK house prices boom as those waiting on the sidelines have only a matter of weeks to act before housing market sentiment responds to prices rising at a rate of more than 10% per annum. The days of under offering for good houses in good locations is about to end.

Market Oracle - Walayat

He's been banging on about rising house prices for a couple of years. Sadly for those of us waiting on the sidelines things seem to be going his way.

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Remember that Wayalat is thinking as an investor, albeit in a very illiquid asset class. He stocked up on property at least 12 months ago, and if indeed we hit 10% annual HPI he has been forecasting, then he's made a pretty tidy profit out of it. But he isn't in it for the long term, and by the time you see his newsletter turning bearish on property, he will have been back out of it for some time.

His opinions are based on the short term direction of the housing market, despite what he might say.

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Remember that Wayalat is thinking as an investor, albeit in a very illiquid asset class. He stocked up on property at least 12 months ago, and if indeed we hit 10% annual HPI he has been forecasting, then he's made a pretty tidy profit out of it. But he isn't in it for the long term, and by the time you see his newsletter turning bearish on property, he will have been back out of it for some time.

His opinions are based on the short term direction of the housing market, despite what he might say.

Yes, it is very sad to say but even as a huge opposer of the housing market ponsi, if the UK market was a stock with the announcements we have had over the last few years and the data coming out of the market I would be going long.

It wont be long before house are earning more than their owners again, what a sad economy we have......

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Guest unfunded_liability

Remember that Wayalat is thinking as an investor, albeit in a very illiquid asset class. He stocked up on property at least 12 months ago, and if indeed we hit 10% annual HPI he has been forecasting, then he's made a pretty tidy profit out of it. But he isn't in it for the long term, and by the time you see his newsletter turning bearish on property, he will have been back out of it for some time.

His opinions are based on the short term direction of the housing market, despite what he might say.

He also seems to be ignoring wage deflation, dire labour market, a generation of indebted graduates with little chance of saving enough for a deposit, and rampant immigration that further damages the labour market (from a job seekers perspective) and suppresses wage demand.

There may be a house price boom in London due to: job availability, private and corporate btl, rental demand, and that it's the choice destination of most new arrivals.

But the rest of the country bar a few hotspots is fooked, in my opinion.

He's also ignoring interest rates. How many more years into a 25 year mortgage can they stay this low?

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He also seems to be ignoring wage deflation, dire labour market, a generation of indebted graduates with little chance of saving enough for a deposit, and rampant immigration that further damages the labour market (from a job seekers perspective) and suppresses wage demand.

There may be a house price boom in London due to: job availability, private and corporate btl, rental demand, and that it's the choice destination of most new arrivals.

But the rest of the country bar a few hotspots is fooked, in my opinion.

He's also ignoring interest rates. How many more years into a 25 year mortgage can they stay this low?

In fairness to him, he's (arguably wisely) ignored the common sense fundamentals based on two things:

1. Massive QE

2. Positive sentiment, driven by massive QE, media ramping, unquestioning masses, and widespread desire for a return to 2007

With those two things, the fundamentals are temporarily unimportant. As in, as unimportant as gravity in the few seconds that Wile. E. Coyote defies it, before plunging to the bottom of the cliffs. How long those few seconds will last in this situation is anybody's guess, but the housing market is heading south eventually, as surely as Mr. Coyote always does.

And I suspect that Wayalat will have cashed out long before then

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Guest unfunded_liability

In fairness to him, he's (arguably wisely) ignored the common sense fundamentals based on two things:

1. Massive QE

2. Positive sentiment, driven by massive QE, media ramping, unquestioning masses, and widespread desire for a return to 2007

With those two things, the fundamentals are temporarily unimportant. As in, as unimportant as gravity in the few seconds that Wile. E. Coyote defies it, before plunging to the bottom of the cliffs. How long those few seconds will last in this situation is anybody's guess, but the housing market is heading south eventually, as surely as Mr. Coyote always does.

And I suspect that Wayalat will have cashed out long before then

Nethertheless it's painful to apparently be on the wrong side of a long term trend. Timing is everything. C'est la vie ;)

Edited by unfunded_liability

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Nethertheless it's painful to apparently be on the wrong side of a long term trend. Timing is everything. C'est la vie ;)

I totally agree, it hurts like hell. But I am not convinced that this is a long term trend. The way things are going in my area, I can honestly see it all going pear shaped in the next 6 months, let alone lasting until the election. I may well be proven wrong, but I'm damned if I'm jumping in because people like Wayalat are ramping up their short term trades.

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and he needs getting on for about 10% just to cover costs.

Mind if he bought in London he might already be at that point but he needs some more to profit.

Speculating could be an unwise move seeing as the general election is so rapidly approaching and that tends to change things afterwards. Then who knows what the finish of the German elections might bring.

There could be some 180 degree turns in eu policy even if Merkel stays as Chancellor. Apparently the federal elections that will decide the Chancellor are being held today.

Edited by billybong

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and he needs getting on for about 10% just to cover costs.

Mind if he bought in London he might already be at that point but he needs some more to profit.

Speculating could be an unwise move seeing as the general election is so rapidly approaching and that tends to change things afterwards. Then who knows what the finish of the German elections might bring.

There could be some 180 degree turns in eu policy even if Merkel stays as Chancellor. Apparently the federal elections that will decide the Chancellor are being held today.

Thinking about it, I'd be surprised if he'd actually bought physical property as it's so illiquid - he might be ignoring the fundamentals for now but he's not dumb enough to believe that things couldn't turn on a sixpence. I'd guess it would be more sensible to buy some sort of more liquid derivative, like builders shares, which potentially means bigger rewards more quickly, but also allows him to get out nice and fast when the time comes.

IMO buying physical property for investment reasons only would be a major risk right now. I guess I'll know if I'm wrong in a few months :)

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Thinking about it, I'd be surprised if he'd actually bought physical property as it's so illiquid - he might be ignoring the fundamentals for now but he's not dumb enough to believe that things couldn't turn on a sixpence. I'd guess it would be more sensible to buy some sort of more liquid derivative, like builders shares, which potentially means bigger rewards more quickly, but also allows him to get out nice and fast when the time comes.

IMO buying physical property for investment reasons only would be a major risk right now. I guess I'll know if I'm wrong in a few months :)

indeed; we are so close to th top of the buble in London:

- prices higher than 2007

- house prices going up at least 10% pa

- real income falling

- jobs in the city falling

- IRs lowest in the history and slowly going up

- housing benefit limit for £2k pm across the whole London

- London prices supported just by foreign buyers

It seems to me it will go tits up like in Dubai in next 6 months

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Why this clown continues to garner the attention he does on HPC is a complete mystery. Last year CXO evaluated his market timing accuracy since 2006 and gave him a below par 40% rating. He cut his long equity position back to nothing at the beginning of 2012 and missed out on the biggest bull run since 1996 in the process.

He's a charlatan, plain and simple.

Short-term correction followed by Uptrend to Dow 14,000 by Late April / Early May 2012. …I have already cut my net long exposure to the stock market…to 18%…and will likely continue to cut towards about 12% by late April / Early May as it does look like its going to get a lot tougher for stocks from then onwards…

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

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Why this clown continues to garner the attention he does on HPC is a complete mystery. Last year CXO evaluated his market timing accuracy since 2006 and gave him a below par 40% rating. He cut his long equity position back to nothing at the beginning of 2012 and missed out on the biggest bull run since 1996 in the process.

He's a charlatan, plain and simple.

What rating does CXO give us here at housepricecrash.co.uk? ;)

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He also seems to be ignoring wage deflation, dire labour market, a generation of indebted graduates with little chance of saving enough for a deposit, and rampant immigration that further damages the labour market (from a job seekers perspective) and suppresses wage demand.

He's thinking as an investor, you're thinking as someone who wants to buy a house. From an investment point of view it matters not a jot if the locals can't buy a house as long as there is someone who can. Houses are also a very iliquid investment, so the foreigners buying today are in for the long haul. You might as well make the same argument for diamonds - why the hell are the things so expensive if no one can afford them.

Property that is "investment grade" has been going mental for some years now, this will bleed though into stuff that is not really investment grade, and the houses that really are not investment properties will be priced according to local conditions (i.e. likely to fall). Central London seems to have been running at > 10% for the last few years. Everyone predicted a collapse with the banker's bonuses being cut, but it hasn't happened. Demand is offshore.

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Everyone predicted a collapse with the banker's bonuses being cut, but it hasn't happened.

Yet.

And Only because people didn't predict (entirely)the outrageous lengths Governments would go to to prop up the system (bank bailouts, money printing, zirp for ever etc etc).

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Houses are also a very iliquid investment, so the foreigners buying today are in for the long haul. You might as well make the same argument for diamonds - why the hell are the things so expensive if no one can afford them.

....Central London seems to have been running at > 10% for the last few years. Everyone predicted a collapse with the banker's bonuses being cut, but it hasn't happened.

They may think they're in for the long haul buying at painfully high prices, and many of the buyers may have no financial worries or be under any pressure need to sell.

Some owners will be under pressure, and some owners will want to cash in. If we get a tilt of sellers and too few buyers not willing or able to pay anywhere close to what the houses have been bid up to. When some sellers decide to sell for lower prices. It can happen rapidly.

Hasn't happened yet.

If he's "thinking like an investor" then I wouldn't want him involved in managing my savings. A whois on the domain shows this as the registrant's address. Went to auction and sold in 2012: http://www.markjenkinson.co.uk/auctions/tuesday-29th-may-2012/display/226%20Darnall%20Road,%20Darnall,%20Sheffield%20-|-708

If he, or one of his family he's closely linked to, owned that, why did he not keep it for the HPI? Lap up the HPI spin, 'forced to buy' victims.

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and he needs getting on for about 10% just to cover costs.

Getting on for that these days on a 3% stamp duty property once you have bought and sold it on with solicitor's fees and commission ( and in consideration of the loss of investment income that could have been had elsewhere). Which is why the profit may not be there even if this prophet is right.

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They may think they're in for the long haul buying at painfully high prices, and many of the buyers may have no financial worries or be under any pressure need to sell.

Some owners will be under pressure, and some owners will want to cash in. If we get a tilt of sellers and too few buyers not willing or able to pay anywhere close to what the houses have been bid up to. When some sellers decide to sell for lower prices. It can happen rapidly.

Hasn't happened yet.

If he's "thinking like an investor" then I wouldn't want him involved in managing my savings. A whois on the domain shows this as the registrant's address. Went to auction and sold in 2012: http://www.markjenki...ffield%20-|-708

If he, or one of his family he's closely linked to, owned that, why did he not keep it for the HPI? Lap up the HPI spin, 'forced to buy' victims.

Nice bit of forensic work there, sir! Damn right you wouldn't want the stealth boom loon managing your money. Around the time of the last GE I remember him talking up a Brown stealth 'boom' that was conspicuous only by its nonappearance. His record of dud forecasts and false calls speaks for itself. Avoid.

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They may think they're in for the long haul buying at painfully high prices, and many of the buyers may have no financial worries or be under any pressure need to sell.

Some owners will be under pressure, and some owners will want to cash in. If we get a tilt of sellers and too few buyers not willing or able to pay anywhere close to what the houses have been bid up to. When some sellers decide to sell for lower prices. It can happen rapidly.

Based on an admittedly very narrow set of observations, central London has run up 40% in the last 4 years, and the buyers are investors. The houses that I have been watching (because they are next door and one about 5 doors down) went on sale at eyewatering prices, and were sold in 6 weeks. The new owners have not put in appearance: suited managing agents have. This is not "Help to Buy" territory, these are 4 bed houses in central London. I really did fall about laughing when next door went on the market at a ludicrous price, but it sold.

Are these prices "locally sustainable"? Hell no - despite having done pretty well for myself, I probably could not afford to buy the house that I bought in 1995. But from an investment point of view, they are flying.

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History is littered with intelligent people like Nadeem Walayat getting caught up in the mania of the time - remember Isaac Newton and the South Sea Bubble or what Irving Fisher said in 1929?

The 4.5 year 'B wave' rally in US equities likely ended last week along with the 'B wave' rally in London house prices likely peaking this quarter, Q3 2013. If so, that would be exactly 6 years from the peak in Q3 2007 - similar to the way that average house prices peaked in Q4 1973, crashed into 1977 and then rallied into a peak exactly 6 years later in Q4 1979. The final corrective low in that cycle came in 1982.

US/UK equities and London house prices should now be entering a long 'C wave' down that I've got ending in mid-2016. Wave 1 of C down in US equities could see a crash of 35% to 40% by late November/early December 2013. By 2016 the average UK house should not be worth more than 100 oz of gold if history repeats.....

Good stuff, good to see your analysis again, Catflap, I haven't seen you online for ages.

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History is littered with intelligent people like Nadeem Walayat getting caught up in the mania of the time - remember Isaac Newton and the South Sea Bubble or what Irving Fisher said in 1929?

The 4.5 year 'B wave' rally in US equities likely ended last week along with the 'B wave' rally in London house prices likely peaking this quarter, Q3 2013. If so, that would be exactly 6 years from the peak in Q3 2007 - similar to the way that average house prices peaked in Q4 1973, crashed into 1977 and then rallied into a peak exactly 6 years later in Q4 1979. The final corrective low in that cycle came in 1982.

US/UK equities and London house prices should now be entering a long 'C wave' down that I've got ending in mid-2016. Wave 1 of C down in US equities could see a crash of 35% to 40% by late November/early December 2013. By 2016 the average UK house should not be worth more than 100 oz of gold if history repeats.....

You would have thought so with regard to the still inflated price to earnings ratio. Meanwhile we have pretty much followed the 1989-1995 path so far with twin dips in 1991/2 and 1994/5 and now in 2008/9 and 2011/12 (more akin to Fred Harrison's classic 18/19 year housing cycle). The real fall in prices (also) almost exactly the same at around -35% over the 5/6 year decent. The only reason to suspect we wont continue to do so is that we would need a tripling of prices in the next 10/11 years to continue to shadow the course of the last cycle from 1995-2007.

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It seems to me it will go tits up like in Dubai in next 6 months

THAT.

I was in Dubai in 2008... and in London now... the similarities are eerie.

The point that all the cheering crowds shouting "foreign investors will pick up all the properties" ignore is that the type of foreign investor now in London is exactly the same as the types that were in Dubai before 2008 and Hong Kong before that...

fickle, quick buck chasing, "casino" investors.. who are most probably leveraged up to the hilt and would "cash in their chips" at the first sign of trouble.

In fact, IMHO, the fact that its the foreign "casino investors" who are setting the price in London would mean that prices will be less sticky on the way down, than if it had been filled with British homeowners/BTLs who have a stronger emotional attachment to their "portfolio", the casino investors are less likely to try and ride out a drop in prices / drop in demand... and will chase the next bubble somewhere else...

Edited by hayder

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