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MattLG

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I'm currently reading an Economics Degree text book that explains that all economic models predict cyclic behaviour and there are none that result in long term market stagnation. This book is about 11 years old so I was wondering if anyone knows of any newer economic models that may back up market stagnation monkeys. With sources preferably :-)

Cheers,

MattLG

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I'm currently reading an Economics Degree text book that explains that all economic models predict cyclic behaviour and there are none that result in long term market stagnation. This book is about 11 years old so I was wondering if anyone knows of any newer economic models that may back up market stagnation monkeys. With sources preferably :-)

Cheers,

MattLG

If there is one thing I've learned here, it's that markets are cyclical. I would be interested to hear if there have been any change to the ground rules also (although I hope not)

edited for rubbish grammar

Edited by BearLite

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can you ever imagine house prices not moving up or down, but staying the same forever?

no.

I don't think anyone expects them to stay the same forever, just stagnate for a long period of time.

I certainly don't believe any of it till I see a reason why.

MattLG

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I'm currently reading an Economics Degree text book that explains that all economic models predict cyclic behaviour and there are none that result in long term market stagnation. This book is about 11 years old so I was wondering if anyone knows of any newer economic models that may back up market stagnation monkeys. With sources preferably :-)

Cheers,

MattLG

Don't you know it is different this time? :o:blink::D:P

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I'm currently reading an Economics Degree text book that explains that all economic models predict cyclic behaviour and there are none that result in long term market stagnation. This book is about 11 years old so I was wondering if anyone knows of any newer economic models that may back up market stagnation monkeys. With sources preferably :-)

Not unless the market is fixed by government, or licensed monopoly, maybe there is case study of ITV of yore, or the coal board? Look at the ERM, even the government fixing things breaks down eventually, it's like asking the sea to stay still.

A market isn't a market without movement, a market without any activity is failing.

Edited by BuyingBear

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Guest Charlie The Tramp
I was wondering if anyone knows of any newer economic models that may back up market stagnation

Well you can carry out a little research spending say £10.

Obtain details of five properties for sale from local EAs you consider are overpriced and sticking.

Download a copy of their registers from the LR, go to charges and if more than one (you could even find 3 ) the vendor is not in a position to lower their price. Cue Mew.

Therefore if rampant could lead to forced stagnation. <_<

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That is a very good point Charlie - it might even be worth investigating that.

What this will do is create a stickyness to the prices of those properties and mean that they will only be sold below a certain level if the owner is facing absolute calamity.

This wont stop other properties for being sold at a lower price, but it will reduce the liquidity in the market and mean that some people may just never sell - even if they really want to move.

I can think of people I know who may be in that situation.

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I don't think anyone expects them to stay the same forever, just stagnate for a long period of time.

I certainly don't believe any of it till I see a reason why.

MattLG

the market stagnated 95 to 98 but that was at the bottom of the cycle. I think they are asking or expecting a lot for it to stagnate at the top of the cycle.

In all honesty, I think all this talk of HP stagnation is just an attempt to reasure the plebs, and thus avoid everybody running for the exit at the same time. But I suspect [in fact I bet the house on it in] that correct it will.

But as good ole Donald said:

As we know,

There are known knowns

There are things we know we know.

We also know

There are known unknowns.

That is to say

We know there are some things

We do not know.

But there are also unknown unknowns,

The ones we don't know

We don't know.

Donald Rumsfeld —Feb. 12, 2002, Department of Defense news briefing

Edited by Catch22

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Well the dutch market seems (somehwat famously) to have stagnated. Have been trying to find out at what kind of rental yields it stagnated at to see if it can really be compared with the situation here but have not had any luck.

I don't suppose anyone else has a clue where or how to get this information do they ?

Hubba.

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Guest Riser

Well you can carry out a little research spending say £10.

Obtain details of five properties for sale from local EAs you consider are overpriced and sticking.

Download a copy of their registers from the LR, go to charges and if more than one (you could even find 3 ) the vendor is not in a position to lower their price. Cue Mew.

Therefore if rampant could lead to forced stagnation. <_<

It could just result in those that have Mewed being left high and dry as the market falls away. As interest rates rise later in the cycle they could be unable to pay the mortgage leading to reposession.

I like the idea of checking for charges and using the information to negotiate on price, although I am starting to seriously consider building in a couple of years rather than buying at all.

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I think you will find stagnation is normal and house price falls are unusual.

Reading US articles they talk about how the average US house price has never fallen. They then point out that some markets do fall, but that is mostly California in the 90's or special situations like Boston after the dotcom boom or Houston when the oil price crashed.

The falls in the UK 15 years ago were quite unusual. It is not the norm, so I wouldn't expect this to happen again.

(Of course real prices do/will fall, but that doesn't count if you have a mortgage). It wont give an FTB any excuse not to buy.

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stagnation is normal

realprices.gif

house price falls are unusual

Real house price falls have been hidden in the past by high inflation. Global persistently low inflation is also unusual.

Reading US articles they talk about how the average US house price has never fallen.

Again, nominal prices.

http://www.economist.com/finance/displaySt...tory_id=3722894

Since 1950 American house prices in real terms have risen by an annual average of just over 1%. To expect them to rise faster from their current dizzy heights smacks of irrational exuberance, to say the least.

==================================================================

The falls in the UK 15 years ago were quite unusual.

Unusual in that the nominal falls were so large that they were apparent even during a period of moderately high inflation (compared with what we have now). It would only take much smaller real falls today to replicate the nominal falls of the 90's.

(Of course real prices do/will fall, but that doesn't count if you have a mortgage).

What economically ignorant drivel. Real prices are the only way to reliably compare what one generation of homebuyers is paying compared to the next/last generation. You then have to analyse whether that increase is sustainable and/or bearable by that generation taking into account likely increased taxation and negligible state retirement provision, meaning less money is available to be spent on housing, not more.

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(Of course real prices do/will fall, but that doesn't count if you have a mortgage). It wont give an FTB any excuse not to buy.

I'm struggling with this concept... Can you please enlighten me.

Thanks.

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I'm struggling with this concept... Can you please enlighten me.

Thanks.

Maybe if they're still pay down a £200k mortgage debt they can fool themselves into thinking that the house is actually worth £2m and therefore they have nothing to worry about.

Makes voodoo economics look rational.

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I'm currently reading an Economics Degree text book that explains that all economic models predict cyclic behaviour and there are none that result in long term market stagnation. This book is about 11 years old so I was wondering if anyone knows of any newer economic models that may back up market stagnation monkeys. With sources preferably :-)

Cheers,

MattLG

if the economic outlook remains benign then nominal prices may flatline for years....thus falling in real terms........''Money illusion'' is important in the psychology of sellers...in the sense that many who wouldn't dream of knocking 10% off now will quite happily sell for the current price in 3 years' time even though the value then is 10% less in real terms.....thaN NOW.............

All previous corrections in property except the last one saw no nominal falls just inflation-adjusted falls...

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Well the dutch market seems (somehwat famously) to have stagnated. Have been trying to find out at what kind of rental yields it stagnated at to see if it can really be compared with the situation here but have not had any luck.

I don't suppose anyone else has a clue where or how to get this information do they ?

Hubba.

:huh::huh: Depends if you call stagnation a 15% fall on the national NVM register so far this year, in Rotterdam, the second biggest city in Holland, and an overall negative market indice for the year, as a healthy sign of stagnation. Also, the dutch chancellor said last year in the press that the property market booms of the late nineties had stagnated the wider economy, plunging comsumer spending into a recession and that the Dutch economy would no longer be held ransom by the property market after two years of negative growth, I posted an article about it during the summer if you go through the archives. I remember it was part of a wider analysis of the Dutch economy by AMRO investment bank. Suffice as to say, all is cetainly not well with the Dutch property market.

"Prospective home buyers in Rotterdam mercilessly punish sellers whose asking price is too high," the NVM said. As a result, single-family dwellings dropped by 15 percent in Rotterdam during the first half of 2005 and the amount of time such properties remained on the market increased by 20 percent.

http://www.expatica.com/source/site_articl...C+November+2005

Edited by boom_and_bust

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realprices.gif

Real house price falls have been hidden in the past by high inflation. Global persistently low inflation is also unusual.

Again, nominal prices.

http://www.economist.com/finance/displaySt...tory_id=3722894

==================================================================

Unusual in that the nominal falls were so large that they were apparent even during a period of moderately high inflation (compared with what we have now). It would only take much smaller real falls today to replicate the nominal falls of the 90's.

What economically ignorant drivel. Real prices are the only way to reliably compare what one generation of homebuyers is paying compared to the next/last generation. You then have to analyse whether that increase is sustainable and/or bearable by that generation taking into account likely increased taxation and negligible state retirement provision, meaning less money is available to be spent on housing, not more.

the price falls in the 70's were small because wage rises were running at 10%+ p.a.

...as inflation gets smaller the disparity gets bigger....so this time around we are looking at HUGE falls......no BTL in their right mind is going to hold an "asset" that gains NOTHING for the next 15 years while pay catches up.....they want to make money!!!,and by holding in that scenario the value of their houses will FALL BY A THIRD after adjustment,assuming current CPI...so even sticking that money in the bank will double their capital,before tax/inflation.(roughly based on 5%p.a compound)

IT'S A NO BRAINER!!!!...THAT'S WHY PRICES WILL COLLAPSE,IT JUST TAKES A BIT OF TIME FOR THE AVERAGE MUG TO REALISE!

Edited by oracle

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:huh::huh: Depends if you call stagnation a 15% fall on the national NVM register so far this year, in Rotterdam, the second biggest city in Holland, and an overall negative market indice for the year, as a healthy sign of stagnation. Also, the dutch chancellor said last year in the press that the property market booms of the late nineties had stagnated the wider economy, plunging comsumer spending into a recession and that the Dutch economy would no longer be held ransom by the property market after two years of negative growth, I posted an article about it during the summer if you go through the archives. I remember it was part of a wider analysis of the Dutch economy by AMRO investment bank. Suffice as to say, all is cetainly not well with the Dutch property market.

http://www.expatica.com/source/site_articl...C+November+2005

Nice one. Thanks. Hubba.

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I think you will find stagnation is normal and house price falls are unusual.

Reading US articles they talk about how the average US house price has never fallen. They then point out that some markets do fall, but that is mostly California in the 90's or special situations like Boston after the dotcom boom or Houston when the oil price crashed.

The falls in the UK 15 years ago were quite unusual. It is not the norm, so I wouldn't expect this to happen again.

(Of course real prices do/will fall, but that doesn't count if you have a mortgage). It wont give an FTB any excuse not to buy.

Jesus.......H!

Yes Staganation is quite normal and for a period of several years after a Housing Bubble bursts. This is exactly what happened '89 to '96. Prices flat lined for several years after the falls.

Prices don't stagnate at the top, they stagnate at the bottom.... the point when there is no money available to move the prices.

The falls in '89 were as unusual as the stratospheric rises that preceded them.

We've had the stratospheric rises this time. Prices are now falling all around the UK and increasing with every forced sale that has to occur.

Your identikit house is only worth as much as the last identikit house sale on your street, even if that is 30% less than you paid for it six months ago.

"Of course real prices do/will fall, but that doesn't count if you have a mortgage). It wont give an FTB any excuse not to buy.!"

Errrr? So paying £180,000 for a house which two years later is suddenly only worth £126,000 and now with a tasty £54,000 in Negative Equity to 'pay back' as well, is some how OK and doesn't matter because you have the 'protection' of a mortgage?

I think that little financial disaster will give any inteligent FTB a huge raft of reasons not to buy.

Where did you study economics Wiseman?

Why Wiseman?

:lol:

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Guest wrongmove

"Of course real prices do/will fall, but that doesn't count if you have a mortgage). It wont give an FTB any excuse not to buy.!"

Errrr? So paying £180,000 for a house which two years later is suddenly only worth £126,000 and now with a tasty £54,000 in Negative Equity to 'pay back' as well, is some how OK and doesn't matter because you have the 'protection' of a mortgage?

Wiseman is talking about real prices, you are talking about nominal

Jesus....H

:)

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Wiseman is talking about real prices, you are talking about nominal

Jesus....H

:)

Sorry I misunderstood, a FTB has no excuse whatsoever not to RUSH out and buy today what is going to be 1000's of pounds cheaper tommorrow?

Yes lets all go out and get a huge mortgage around our necks on something that is falling in price.....

Did I still miss the point of this cutting edge economic analysis?

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Guest wrongmove

Did I still miss the point of this cutting edge economic analysis?

Yes. :)

Wiseman was talking about nominal price stagnation. I.e. falls in real prices, but steady nominal prices. So properties would not cost less in nominal terms, they would cost the same. In real terms they would be less, but this will not cause negative equity.

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stagnation is not good for the property industry in the medium or long term.

If prices aren't doing anything, volume is low and not much commission is being generated, or surveying done etc etc

certain VIs will also be agitating against stagnation soon enough.

Oh, and it doesn't sell papers either. :ph34r:

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Wiseman was talking about nominal price stagnation. I.e. falls in real prices, but steady nominal prices.

These falls in real prices would have to be very small not to also impact nominal prices, given today's low inflation. It is probably unnecessary to state that most HPC contributors think real falls will be larger than this.

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  • 301 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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