Final Warning For A Uk House Prices Boom

[zugzwang]

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.

Are we really following the pattern of '89-95? The 1995 cycle minimum occurred a couple of years after the economy had begun to recover when interest rates were rising again. Surely there's no relation between that, current market conditions and the broader economy?

[crashmonitor]

Are we really following the pattern of '89-95? The 1995 cycle minimum occurred a couple of years after the economy had begun to recover when interest rates were rising again. Surely there's no relation between that, current market conditions and the broader economy?

Possibly no similarity in economic conditions as you say. And no doubt the paths of the two cycles will start to diverge.

However, if in 2007 we had looked to the last crash and said this is what is going to happen we wouldn't have been far out. A peak to trough crash over 5/6 years with a sucker's rally at the half way stage, both around -35% real.

Edited September 24, 2013 by crashmonitor

[FreeTrader]

Possibly no similarity in economic conditions as you say. And no doubt the paths of the two cycles will start to diverge.

However, if in 2007 we had looked to the last crash and said this is what is going to happen we wouldn't have been far out. A peak to trough crash over 5/6 years with a sucker's rally at the half way stage, both around -35% real.

Here's the latest situation with the two crashes compared:

However things look different when adjusting for earnings rather than RPI.

(I'll fully update the Halifax charts thread next month when we have the quarterly regional figures.)

[Spork of Damocles]

Are we really following the pattern of '89-95?

No. Interest rates were punishingly high during this phase because of inflation and the ERM requirements even before they reached, albeit for one day only, the eyewatering levels of Black (um, White) Wednesday.

And London dropped like a stone the minute the crash hit, only stabilising around 1993.

[dances with sheeple]

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...

Yes, and it could turn down really fast? All the ordinary Londoners are leveraged up on I.O to keep up. many of them will get slaughtered I imagine?

[crashmonitor]

No. Interest rates were punishingly high during this phase because of inflation and the ERM requirements even before they reached, albeit for one day only, the eyewatering levels of Black (um, White) Wednesday.

And London dropped like a stone the minute the crash hit, only stabilising around 1993.

It's very similar in the provinces. Indeed if you exclude London the crash would probably be more like the six plus years we experienced last time as opposed to the five years and two months the Halifax comes up with for the 2007-12 crash. And, of course, the die hards would say we haven't got to the bottom yet.

Edited September 24, 2013 by crashmonitor

[crashmonitor]

I'm guessing this guy is feeling pretty smug about the timing of his final warning with HTB2 being brought forward.

[zugzwang]

I'm guessing this guy is feeling pretty smug about the timing of his final warning with HTB2 being brought forward.

Means nothing yet. In any case, a stopped clock is right twice a day. Walayat's long-term record says more about him than one lucky call.

[Fully Detached]

If that was not enough, there is a depression cycle that I can trace back 200 years which is now due.....

You just made my Christmas card list. Thank you

[The Masked Tulip]

Unfortunately I can't post any charts due to error messages, but looks to me like wave (ii) of wave 1 of wave C is completing today in early trading on the S&P and then crash wave (iii) of 1 of C gets underway. I don't know if we will crash as much in percentage terms as say 1987, but between 20% and 30% seems certain and 2011 was around 21% to 22%.

I'm looking for an intra-day crash low on Friday October 25, 2013 to be followed by a closing low (that's lower than the October closing low) on Wednesday December 4, 2013.

Unlike the FTSE which had a sharp decline and has produced a well defined lower right shoulder, similar to what US indices did after the 1929 top and 1987 top, the US indices currently have no lower right should - this is because the September top has to be considered a higher right shoulder and can be seen as such when looking at the Dow on a weekly chart using closing prices.

For most people trading, there is going to be no warning and a bounce (the lower right shoulder in US indices) that never comes. I think this has to be one of the most extreme market tops in history – more extreme than the 1987 and 1929 tops which did at least have defined lower right shoulders before the big break came. This decline could be equally extreme.

LOL - I'm actually quite an optimistic person!

Good grief Catflap. That is a drastic and dramatic prediction. Worthy of a bump.

[Eddie_George]

Unfortunately I can't post any charts due to error messages, but looks to me like wave (ii) of wave 1 of wave C is completing today in early trading on the S&P and then crash wave (iii) of 1 of C gets underway. I don't know if we will crash as much in percentage terms as say 1987, but between 20% and 30% seems certain and 2011 was around 21% to 22%.

I'm looking for an intra-day crash low on Friday October 25, 2013 to be followed by a closing low (that's lower than the October closing low) on Wednesday December 4, 2013.

Unlike the FTSE which had a sharp decline and has produced a well defined lower right shoulder, similar to what US indices did after the 1929 top and 1987 top, the US indices currently have no lower right should - this is because the September top has to be considered a higher right shoulder and can be seen as such when looking at the Dow on a weekly chart using closing prices.

For most people trading, there is going to be no warning and a bounce (the lower right shoulder in US indices) that never comes. I think this has to be one of the most extreme market tops in history – more extreme than the 1987 and 1929 tops which did at least have defined lower right shoulders before the big break came. This decline could be equally extreme.

LOL - I'm actually quite an optimistic person!

I concur:

[The Masked Tulip]

TMT Wave iii(z).

[winkie]

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

Sometimes quality of life comes before rising house prices.......you don't force yourself to live somewhere because you think you are sitting on a gold mine....streets paved with gold, ridiculous.

[The Masked Tulip]

History tells us that some of the worst stock-market nightmares have occurred during the month of October.

Black Friday: Oct. 29, 1929: Dow Jones drops 12.8%.

Black Monday: Oct. 19, 1987: Dow Jones loses 22.6%.

Friday the 13th, 1989 Mini-Crash: Dow Jones falls 6.91%.

Oct. 27, 1997 Mini Crash: Dow Jones drops 550 points, or 7.2%.

Black Week: Beginning Oct. 6, 2008: Dow Jones drops 18.2% for the week.

Oct. 15, 2008: Dow sinks 733 points (7.87%) after Ben Bernanke explains that this will not be a "V"-shaped recession.

Oct. 22, 2008: Dow falls 514 points (5.69%) after weak third-quarter earnings season drives home the message that the recession is seriously bad.

http://www.marketwatch.com/story/here-comes-a-ghoulish-october-2013-10-02

[The Masked Tulip]

bump.

[The Masked Tulip]

It's much worse than that when you just study the declines in the August to October timeframe, eg.

Dow September 1929 to October 1929 was 48%

Dow/S&P August to October 1987 was 41% and 36% respectively

Dow/S&P August to October 2008 was 34% and 36% respectively

My work does suggest that the Dow could crash by 32% over the next few weeks, back to the August 2011 low. I'm deadly serious - this is one giant bubble that's absolutely ripe for bursting and with it goes the London property market tulip-mania-delusion with garages for £1/4 million......

http://www.rightmove.co.uk/property-for-sale/property-22641030.html

Ha ha ha - I was just about to ask you if you are deadly serious about it. I hope you are right Catflap.

[zugzwang]

It's much worse than that when you just study the declines in the August to October timeframe, eg.

Dow September 1929 to October 1929 was 48%

Dow/S&P August to October 1987 was 41% and 36% respectively

Dow/S&P August to October 2008 was 34% and 36% respectively

My work does suggest that the Dow could crash by 32% over the next few weeks, back to the August 2011 low. I'm deadly serious - this is one giant bubble that's absolutely ripe for bursting and with it goes the London property market tulip-mania-delusion with garages for £1/4 million......

http://www.rightmove...y-22641030.html

First time I've seen this. Very good. Lots of negative indicators around.

Perhaps Osborne can hold things up for a while with his Death Bubble?

[24gray24]

I fear there's too much bias on this thread in favour of a price collapse.

So far, the Fed and BoE have prevented any decline in housing or share prices by simply printing more money, and keeping the bubble inflated.

The result has been house prices and stock prices have been propped up, while the cost of living has risen to reflect all that extra paper flying around.

What is to stop them continuing with this policy? Nothing as far as I can see.

If you want to argue for the end of QE, you have to come up with a reason why, and why now.

I can think of one bad reason: until the statute of limitations expires on pre 2008 frauds, they have to keep things sweet. However, once they cannot be sent to jail, they can collapse the market and buy back in on cheap prices. QE will not allow them to buy cheap as it keeps the bubble inflated.

[The Masked Tulip]

I fear there's too much bias on this thread in favour of a price collapse.

So far, the Fed and BoE have prevented any decline in housing or share prices by simply printing more money, and keeping the bubble inflated.

The result has been house prices and stock prices have been propped up, while the cost of living has risen to reflect all that extra paper flying around.

What is to stop them continuing with this policy? Nothing as far as I can see.

If you want to argue for the end of QE, you have to come up with a reason why, and why now.

I can think of one bad reason: until the statute of limitations expires on pre 2008 frauds, they have to keep things sweet. However, once they cannot be sent to jail, they can collapse the market and buy back in on cheap prices. QE will not allow them to buy cheap as it keeps the bubble inflated.

This isn't technically about the end of QE is it? It is about the US debt ceiling which is a self-made construct that stops the US spending money if the ceiling is not raised - which means that no QE could be printed until it is.

I think they will raise the ceiling - they have to - but it is just a question of when IMPO.

[19 year mortgage 8itch]

I think it's time for him to throw in the towel

Someone who's comments I read on a blog said his indicator was showing 17 times the money long than short last Thursday - it's the highest he's seen in 14 years of looking at the numbers.

Are you interpreting this as a sign things will happen the other way?

[19 year mortgage 8itch]

Absolutely - the johnny come lately's were out in force at the end of last week in the US which must have produced the high reading. Just like the housing market in the UK now. the same as it was in Q3 2007 and the same as it will always be. People seem to love buying at the top of a market and never seem to learn from history - even very recent history.

Almost everyone is long the market, therefore there can only be sellers. It will be interesting watching the stampede for the exits over the next 2-3 weeks

Heifer whines could be human cries

Closer comes the screaming knife

This beautiful creature must die

This beautiful creature must die

One of my core beliefs about UK residential property is that so many people seem to be winning. Unless I can buy a property I am happy to keep I don't want to be caught with these 'winners'.

Is that silly?

[The Masked Tulip]

Absolutely - the johnny come lately's were out in force at the end of last week in the US which must have produced the high reading. Just like the housing market in the UK now. the same as it was in Q3 2007 and the same as it will always be. People seem to love buying at the top of a market and never seem to learn from history - even very recent history.

Almost everyone is long the market, therefore there can only be sellers. It will be interesting watching the stampede for the exits over the next 2-3 weeks

Heifer whines could be human cries

Closer comes the screaming knife

This beautiful creature must die

This beautiful creature must die

I take it you are not buying Royal Mail shares then Catflap?

[Tonkers]

One of my core beliefs about UK residential property is that so many people seem to be winning. Unless I can buy a property I am happy to keep I don't want to be caught with these 'winners'.

Is that silly?

Ah, but you almost never hear about the losers

[shindigger]

I take it you are not buying Royal Mail shares then Catflap?

My idea, for what its worth is to sell them quick.

Realise some free dosh and then wait for a bit.

If i get all i applied for (doubtful) and they perform as forecast, (who knows) i could be in for a nice little chunk.

Which i will then park for a bit til Barry sorts his **** out.

[tomandlu]

What is to stop them continuing with this policy? Nothing as far as I can see.

If you want to argue for the end of QE, you have to come up with a reason why, and why now.

Widespread poverty and growing unrest?