The Great Uk Property Debate

[cuddlybear]

(Sorry if there is already a thread about this but I haven't noticed it, please move/delete if so)

Quite interesting use of an hour:

http://signup.bigpictureinvestment.co.uk/X972PC07

Executive summary:

Phillip J Anderson believes we have an eighteen-year (approx) cycle, so due for about fourteen years going up. Generally quite bullish on property (Ricardo's Law of Rent etc) but not a perma-bull, believes we will always have the cyclical decline in the cycle. Believes the government meddling is just part of the cycle, he doesn't explicitly say so but I get the impression he thinks the money-printing and lack of room to cut interest rates will cause the next bust (2026ish) to be absolutely monumental.

James Ferguson accepts fourteen years up and four years down is about reasonable but believes the government meddling is so severe that the cycle is in abeyance until interest rates have to go up... then we have the downtrend and the subsequent boom after that. He thinks the government's arsenal is pretty much empty.

Both have some credibility in that Anderson isn't a perma-bull (you can see articles on his website calling the approach of the peak), and Ferguson was busy in the 90s downturn buying three-bed houses in Clapham for £57,000, interesting he bought that downturn but not the current one.

Thoughts anyone?

[Reck B]

(Sorry if there is already a thread about this but I haven't noticed it, please move/delete if so)

Quite interesting use of an hour:

http://signup.bigpictureinvestment.co.uk/X972PC07

Executive summary:

Phillip J Anderson believes we have an eighteen-year (approx) cycle, so due for about fourteen years going up. Generally quite bullish on property (Ricardo's Law of Rent etc) but not a perma-bull, believes we will always have the cyclical decline in the cycle. Believes the government meddling is just part of the cycle, he doesn't explicitly say so but I get the impression he thinks the money-printing and lack of room to cut interest rates will cause the next bust (2026ish) to be absolutely monumental.

James Ferguson accepts fourteen years up and four years down is about reasonable but believes the government meddling is so severe that the cycle is in abeyance until interest rates have to go up... then we have the downtrend and the subsequent boom after that. He thinks the government's arsenal is pretty much empty.

Both have some credibility in that Anderson isn't a perma-bull (you can see articles on his website calling the approach of the peak), and Ferguson was busy in the 90s downturn buying three-bed houses in Clapham for £57,000, interesting he bought that downturn but not the current one.

Thoughts anyone?

2026 for the 'next' bust?

What about this one, which got 1/3rd way through before countless moronic policies got thought up in the minds of our mad, bad governments?,

If the 2008 bust doesn't resume by 2016, I.ll cry.

[The Knimbies who say No]

(Sorry if there is already a thread about this but I haven't noticed it, please move/delete if so)

Quite interesting use of an hour:

http://signup.bigpictureinvestment.co.uk/X972PC07

Executive summary:

Phillip J Anderson believes we have an eighteen-year (approx) cycle, so due for about fourteen years going up. Generally quite bullish on property (Ricardo's Law of Rent etc) but not a perma-bull, believes we will always have the cyclical decline in the cycle. Believes the government meddling is just part of the cycle, he doesn't explicitly say so but I get the impression he thinks the money-printing and lack of room to cut interest rates will cause the next bust (2026ish) to be absolutely monumental.

James Ferguson accepts fourteen years up and four years down is about reasonable but believes the government meddling is so severe that the cycle is in abeyance until interest rates have to go up... then we have the downtrend and the subsequent boom after that. He thinks the government's arsenal is pretty much empty.

Both have some credibility in that Anderson isn't a perma-bull (you can see articles on his website calling the approach of the peak), and Ferguson was busy in the 90s downturn buying three-bed houses in Clapham for £57,000, interesting he bought that downturn but not the current one.

Thoughts anyone?

Not a perma bull, but we're due for 14 years up any minute now.

[subliminal]

BUY A HOUSE, MAYBE A FEW.

[/subliminal]

[zugzwang]

What 18yr cycle? These peaks correlate well with timing of General Elections (always a somewhat uncertain affair until this parliament). So, more like 4/5 years with corrections in between.

[Killer Bunny]

Thoughts anyone?

I'm just not convinced that rates will rise at all. See Sky statement below

[cuddlybear]

I'm just not convinced that rates will rise at all. See Sky statement below

Does that mean you support the Phillip J Anderson position that there will now be a fourteen-year property upswing? Or that his cycle is out the window and we're #TurningJapanese?

Did you watch the debate? Would have been good to see Mr Anderson (attempt to) answer this question - where is Japan in its eighteen-year cycle?

[steve99]

I'm just not convinced that rates will rise at all. See Sky statement below

I say never, just like japan. Japan has had a 20year ++ decline in house prices and wages for many whilst under zirp. Have friends over there, Him Ausie, same contract wage as 15 years ago, She wage cuts with each job transfer within the company but more responsibility. (lesser title, lesser wage apparently) and she works for a big camera company. Thier flat they bought 8 years ago when prices had dropped to the bottom 1/2 1990 price in nominal terms has now dropped even more as they found out while trying to sell it. Apparently the roll over of demographics is causing this. UK govt stuck on stupid and it would take a radical to increase interest rates, ever. What we really need to get people spending again is high interest rates, I and all savers I know are in siege mentality mode and have cut to the bone out of future fear and distrust of the system. Housing would become affordable more quickly also.

[cuddlybear]

What 18yr cycle? These peaks correlate well with timing of General Elections (always a somewhat uncertain affair until this parliament). So, more like 4/5 years with corrections in between.

I think he would argue 1972 was a peak followed by a bust (negative real HPI in the years following) then 1989 was a peak followed by a bust, then 2007/08. Hence he's calling a new peak around 2026. He reckons you can use indicators like the stock market and also the USA leads the cycle (according to him)... so he suggests getting in to property ASAP and then selling up sharpish when the US property market turns around 2026.

[steve99]

,

Edited March 7, 2014 by steve99

[Wurzel Of Highbridge]

What 18yr cycle? These peaks correlate well with timing of General Elections (always a somewhat uncertain affair until this parliament). So, more like 4/5 years with corrections in between.

I think he would argue 1972 was a peak followed by a bust (negative real HPI in the years following) then 1989 was a peak followed by a bust, then 2007/08. Hence he's calling a new peak around 2026. He reckons you can use indicators like the stock market and also the USA leads the cycle (according to him)... so he suggests getting in to property ASAP and then selling up sharpish when the US property market turns around 2026.

I don't think you can make any argument just looking at wage prices, you need to also look at the earnings underpinning those price rises.

After all house prices are just a function of:

> Earnings

> Mortgage rates

> Loan to value

> Loan length

I cannot see earnings picking up, mainly due to globalization and international competition.

Mortgage rates really can't go much lower.

Loan to values are back to 95%, to another 5% maximum

Loan lengths upto 40 years are already available.

So just what is going to 'drive' prices higher?

The last price inflation between 1998 and 2008 only happened due to cheap credit, not due to earnings increases - that's why were are all on this website complaining.

Edited March 8, 2014 by Wurzel Of Highbridge

[crashmonitor]

Fred Harrison used to further clarify the 18 year cycle, by claiming a mid term boomlet and mini bust. We had the peak in 1972. A 17 year gap to the peak of 1989 and an 18 year gap to the peak of 2007. Spookily accurate.

In cycle one we got the boomlet of 1979 followed by bust, at peak +7 years. In cycle two we got the boomlet of 1996 at peak +7 years. And now we have the boomlet of 2014 at peak +7 years.

Each mini boomlet was followed by a mini bust, before the big push to the 18 year cyclical peak.

I have always been a follower of the housing cycle theory. I believed we would hit the bottom around 2012 and regain the nominal peak around 2017, even so a bit pessimistic (looks like 2015). Following Harrison's theory has proved almost spot on since 1972. So why no one saw it coming in 2007 just beggars belief and shows how stupid politicians are generally.

Edited March 8, 2014 by crashmonitor

[Venger]

Not a perma bull, but we're due for 14 years up any minute now.

[subliminal]

BUY A HOUSE, MAYBE A FEW.

[/subliminal]

Many people genuinely believe this, or variants of it, including house prices good value. Limited supply. And they are on the buying side of the equation every day, setting high and higher prices still. Their own personal choice to buy. Even when they're taking on mega-debt to pay the prices.

And it could be the correct path if market intervention and continued government meddling prevents the forever HPI believers from ever having to do more than a few moments of thinking before they meet such high asking prices.

I can't understand hpcers sacrificing themselves, and others with excuses for buyers... feeling sorry for them, 'they just wanted a home'.

Save it for after a crash you ........

[The Preacherman]

Fred Harrison used to further clarify the 18 year cycle, by claiming a mid term boomlet and mini bust. We had the peak in 1972. A 17 year gap to the peak of 1989 and an 18 year gap to the peak of 2007. Spookily accurate.

In cycle one we got the boomlet of 1979 followed by bust, at peak +7 years. In cycle two we got the boomlet of 1996 at peak +7 years. And now we have the boomlet of 2014 at peak +7 years.

Each mini boomlet was followed by a mini bust, before the big push to the 18 year cyclical peak.

I have always been a follower of the housing cycle theory. I believed we would hit the bottom around 2012 and regain the nominal peak around 2017, even so a bit pessimistic (looks like 2015). Following Harrison's theory has proved almost spot on since 1972. So why no one saw it coming in 2007 just beggars belief and shows how stupid politicians are generally.

Sound logic but where does London fit into this which hasn't had a proper bust?

[Killer Bunny]

Does that mean you support the Phillip J Anderson position that there will now be a fourteen-year property upswing? Or that his cycle is out the window and we're #TurningJapanese?

Did you watch the debate? Would have been good to see Mr Anderson (attempt to) answer this question - where is Japan in its eighteen-year cycle?

No not at all. Not if we're #turningjapanese though we don't know yet though the evidence is building

I didn't want to give away my email to people I don;t know so I didn't watch it

I have a lot of time for JF. I don't know the other guy

Did PA say we were at the bottom and now for 14 years of rises? Wow. Is he Nadeem Wayalat?

Japan is very definitely IMHO at bottom of multi year rise. Probably multi decade

[Killer Bunny]

Nice chart...

[winkie]

Nice chart...

[cuddlybear]

No not at all. Not if we're #turningjapanese though we don't know yet though the evidence is building

I didn't want to give away my email to people I don;t know so I didn't watch it

I have a lot of time for JF. I don't know the other guy

Did PA say we were at the bottom and now for 14 years of rises? Wow. Is he Nadeem Wayalat?

Japan is very definitely IMHO at bottom of multi year rise. Probably multi decade

Re the email, just set up a new Hotmail address and you're laughing I reckon. Worth watching.

Yes indeed PA said we were at the bottom and due for fourteen years of increases. Wow indeed. JF said we are at the top of this cycle broadly speaking.

[cuddlybear]

Just bumping my own thread here...

Here's Phil Anderson's eighteen-year property clock:

http://phillipjanderson.com/real-estate-cycle/

(Scroll down)

So he's claiming we're at about 4am in the cycle I think (about one or two years in to the upswing so twelve or thirteen years to go before the downswing)

In the video he claims that governments have been able to get away with the money-printing etc without causing *too* much inflation because of where we are in the Kondratieff cycle. He says rate increases may cause a blip but rate increases will only be allowed when they won't cause a crash so there won't be a problem

The Phil Anderson cycle thing is interesting but not consistent with Martin Armstrong's 78-year US real estate cycle which would suggest we will have a couple of years of a snap-back rally and then be in for a proper depression: http://armstrongeconomics.com/wp-content/uploads/2012/03/a-forecast-for-real-estate-111509.pdf

These would appear to contradict each other but I don't really have enough historical data to confirm/disprove either or both of them

[cuddlybear]

Basically, we're stuffed for years to come if he is to be believed.

Absolutely, I hope he's not!

[Venger]

I think he would argue 1972 was a peak followed by a bust (negative real HPI in the years following) then 1989 was a peak followed by a bust, then 2007/08. Hence he's calling a new peak around 2026. He reckons you can use indicators like the stock market and also the USA leads the cycle (according to him)... so he suggests getting in to property ASAP and then selling up sharpish when the US property market turns around 2026.

Just bumping my own thread here...

Here's Phil Anderson's eighteen-year property clock:

So he's claiming we're at about 4am in the cycle I think (about one or two years in to the upswing so twelve or thirteen years to go before the downswing)

In the video he claims that governments have been able to get away with the money-printing etc without causing *too* much inflation because of where we are in the Kondratieff cycle. He says rate increases may cause a blip but rate increases will only be allowed when they won't cause a crash so there won't be a problem

Haha, and people wonder why I'm tough on those hpcers saying all buyers are victims?

This is on the other side of the market.

You're a funny guy Cuddly.

You won't catch me giving victim-excuses for the older VI who have enjoyed long-wave boom, for decades, complacent at the top of the market.

Looking for a total wipeout of their positions.

[Venger]

"It's just being a properly devious enemy. Always unsettle the opposition if possible."

- Matter. (Iain M Banks)

[cuddlybear]

Thanks Venger, your last few posts have broken up the monotony of the "victims" comments

If you scroll up this thread you'll see I posted a link to an hour-long debate and gave a brief summary of both points of view espoused

I don't think anyone really watched the hour-long programme unfortunately so I didn't get many interesting comments back

I was more interested in the bull position (Phillip J Anderson) because the bear position (James Ferguson) is broadly the HPC position - that valuations held up by ridiculous and unsustainable government props - and we all know that argument back-to-front by now

You've made it very clear what you *want* to happen, that's understood, would be interested to hear your views after watching the video I linked to originally

[Venger]

It's a market, and one with many different viewpoints, and much by way of coarse entitlement. Your guy here, and so many others, expecting decade+ upswing from here. People make their own decisions.

I know what you are doing here.

The only access to that video I could get, even after using a roving email to register, was to a 2 minute preview, and you P.J.A guy .

We'll be broadcasting the full debate between Phillip and James one week from now...

Your PJA guy is Australian, and looks it (get a haircut). From all his other YouTube stuff, you follow that if it's your thing; Phillip "J"...

Edit (correct link) https://www.youtube.com/user/PhillipJAnderson

Sounds like after leaving his family's embroidery business, read a few books and identified a cycle that few other pay attention to. 'Population growth' - love it. He's got a book, woo. Sounds Bardon-esque to me. Forever inflation.

Edited September 2, 2014 by Venger

[cuddlybear]

Sorry I think this is a better link

http://videos.bigpictureinvestment.co.uk/debate.html

Hopefully that will take you straight in to the debate, they may send you another link in a week's time I suppose

It would be interesting to hear your views on the content, if possible without any use of the words "victims" or "excuses"

[Venger]

James Ferguson, smarter by a long way, recognising the cycle has been overridden (that we didn't have a crash because Govs responsided with extreme measures)... saying we're at a market top, knowing that very few sellers get out at 90% peak when the market turns --------> but also winding me up, recounting houses he's bought cheap in the early 90s with his property companise, £57,000 yielding 16-18%... now worth over a million and some; houses as the investment class. Although he also says house prices never been cheaper against interest rates - but extraordinary policy to make it that way.

I do have a problem with the hpcers claiming buyers of last few years, and tomorrow, are victims. They were saying the same years ago, before house prices doubled again... and they're still saying it now. They wind me up more than all the BTLers/property-VI, combined, and his rosy outlook. It's intolerable madness these excuses for other people's decisions who choose to buy. Give me post-after-post explaining 15 more years HPI over these excuses for buyers choosing to pay £whatever, all of the time.

When on the otherside, other market participants (Phillip J Anderson) feel we're even at a market low, expecting another long wave with massive market gains. Build another train line, and it leads to massive more HPI, according to him, it seems. Claiming the stimulus all built into future, and Govs will be lauded in the future for turning it around. That will be when houses are what, three or four times what they're valued at now, to protect the old VI victims, and those still choosing to buy at these prices.

He may have a point that if/when interest rates raise, it will mean banks will be keeer to do more lending. Hopefully against lower house prices.